BlackRock takes on hedge fund giants

One for the diary: The FT’s Future of Asset Management Europe event takes place on November 25-26 at the Landmark London, with speakers including the London Stock Exchange’s Julia Hoggett and Schroders chief executive Richard Oldfield. Register here and use the code AMNL10 for a 10 per cent discount on your in-person or digital pass.

In today’s newsletter:

• BlackRock revamps flagship quant hedge fund

• Warren Buffett steps back from the limelight

• China’s secret gold purchases

BlackRock to compete with hedge fund giants

The world’s largest asset manager might be best known for its dominance in the realm of index trackers, but BlackRock plans to take on the giants of hedge fund land.

The US fund group, which has $13.5tn of assets under management and is led by Larry Fink, is revamping its flagship quant hedge fund as it seeks to compete with industry stalwarts such as DE Shaw, Citadel and Millennium.

BlackRock is adding stockpickers to Systematic Total Alpha, its top mathematical and data-driven hedge fund, following a strategy pursued by multi-manager hedge funds that house human and computer-driven strategies under one roof, writes Costas Mourselas.

The quant fund is also expanding fundraising efforts to challenge larger rivals after securing the three-year trading record required by many allocators to invest.

STA had $7bn in capital to invest as of the end of October, up from $5bn in August, but is still a relative minnow compared with the multi-strategy firms Citadel and Millennium.

Between its launch in June 2022 and October this year it returned 14 per cent on an annualised basis, net of fees, a strong performance for a three-year period but one that STA will need to show it can maintain over a longer timeframe.

STA is only part of BlackRock’s wider hedge fund business, which has about $90bn in client assets, making it one of the biggest hedge fund platforms in the world. BlackRock has increasingly been investing in its alternative asset management business, having purchased private credit manager HPS for $12bn last year.

BlackRock does not plan to recruit from outside the group but to make use of existing employees elsewhere in its hedge fund business to help increase the stability of STA’s returns.

Warren Buffett steps back from the limelight

The world’s most renowned investor has decided to take a step back from the limelight, writes Amelia Pollard.

Warren Buffett has told Berkshire Hathaway shareholders that he is “going quiet” as the world’s most famous investor draws a line under a career that has shaped corporate America and Wall Street over the past six decades.

“As the British would say, I’m ‘going quiet’. Sort of,” Buffett wrote in a letter published last week last week.

The 95-year-old will reduce his day-to-day responsibilities at Berkshire at the end of this year, when he retires from his role as chief executive. Buffett said the company’s next annual letter, which is widely followed by legions of retail and institutional investors, will be written by someone else.

Although Buffett will no longer run the company, he said that he would keep holding a “significant” portion of Berkshire’s class A shares, which give him significant sway over the insurance to rail conglomerate, until shareholders grow more accustomed to his successor Greg Abel. He will also continue writing to shareholders through his annual Thanksgiving letters, which centre on his philanthropy.

Investors have long seen Buffett, often called the “Oracle of Omaha”, as a corporate folk hero, interspersing guidance on his portfolio companies’ performance with life and business advice.

His frank manner with shareholders, both through his annual letters and his marathon question and answer sessions during the annual meetings in Omaha, has been a hallmark of his tenure.

Buffett’s letter to shareholderstook the same tone, with warnings about corporate greed interlaced with calls for kindness.

He noted, for instance, that requirements for executive compensation disclosures backfired as business chiefs engaged in a race to earn more than rivals.

“What often bothers very wealthy CEOs — they are human, after all — is that other CEOs are getting even richer,” Buffett said. “Envy and greed walk hand in hand.”

Chart of the week

China’s unreported gold purchases could be more than 10 times its official figures as it quietly tries to diversify away from the US dollar, say analysts, highlighting the increasingly opaque sources of demand behind bullion’s record-breaking rally.

Publicly reported buying by China’s central bank has been so low this year — 1.9 tonnes purchased in August, 1.9 tonnes in July and 2.2 tonnes in June — that few in the market believe the official figures, writes Leslie Hook.

Analysts at Société Générale estimate, based on trade data, that China’s total purchases could reach as much as 250 tonnes this year, or more than a third of total global central bank demand.

The scale of the country’s unreported purchases highlights the growing challenges facing traders trying to work out where prices go next in a market increasingly dominated by central bank purchases.

“China is buying gold as part of their de-dollarisation strategy,” said Jeff Currie, chief strategy officer of energy pathways at Carlyle, who says he does not try to guess how much gold the People’s Bank of China is buying.

“Unlike oil, where you can track it with satellites, with gold you can’t. There’s just no way to know where this stuff goes and who is buying it.”

Five unmissable stories this week

Michael Burry, the investor made famous by his bet against the US housing market ahead of the 2008 financial crisis, is closing his hedge fund as he warned that market valuations had become unhinged from fundamentals.

The $590bn California Public Employees’ Retirement System has lifted its private equity allocation to 18 per cent in a big bet on the sector.

Elliott Management, the US hedge fund founded by billionaire Paul Singer, has sought to reassure investors that its vast size has not become an obstacle as its returns lag behind Wall Street stock markets.

Man Group plans to cut London-based jobs and move some roles to Bulgaria, as the world’s largest listed hedge fund manager seeks to improve its performance after a turbulent period for AHL, its most famous unit.

UK government plans to cap the tax benefits of salary sacrifice schemes will erode trust in the savings system and strike a “reckless” hit on businesses and jobs, according to opposition parties and pensions experts.  

And finally

Annely Juda Fine Art has opened its inaugural exhibition at the gallery’s new space in London’s Hanover Square with a display by David Hockney, showcasing a series of new paintings.

Until February 28 2026