Crypto Hedge Fund Taps Former BlackRock CIO as Strategy Head

Matthew McBrady to help Strix Leviathan manage risk in DeFi-related investments, build out product set


Matthew McBrady | Source: Strix Leviathan


key takeaways

  • Opportunity comes from inefficiencies, of which the crypto space has an increasing number, McBrady tells Blockworks
  • The firm is finishing the rebuild of its trading infrastructure to better ingest a broader array of data

A former chief investment officer of a BlackRock multi-strategy hedge fund is joining quant crypto hedge fund Strix Leviathan to broaden its suite of strategies and help the firm capture opportunities in the market.  

The world’s largest asset manager hired Matthew McBrady in 2014 to overhaul the investment process and operating structure of its $1.5 billion multi-strategy hedge fund — a role he was in for nearly three years.  

Before BlackRock, McBrady was head of investment strategy and risk management at alternative investment adviser Silver Creek Capital Management and a vice president for Bain Capital’s North American private equity group. Earlier in his career, he was an international economist with Janet Yellen on President Clinton’s Council of Economic Advisors.

“Matt’s extensive experience in building and running alternative investment strategies for some of the most demanding LPs in the world is simply unparalleled,” Strix Leviathan CEO Sadie Raney said in a statement. “His skillset and credibility as a successful entrepreneur and an advisor to policymakers and technology startups will be a true asset to our firm’s investment strategies and our investors.” 

McBrady began monitoring the crypto space in 2017. He was introduced to Raney a few years ago through a former colleague and has been an adviser on the firm’s investment committee.

“A great time to get into anything, in fact, is when the simple buy-and-hold strategy is no longer a good one, let alone a dominant one,” McBrady told Blockworks. “I think it is a great time to be getting into crypto just because of the crypto winter and all the number of large players that have been shaken out and the stress in the system.” 

McBrady decided to take the full-time leap into crypto upon realizing that the inefficiencies in space are temporarily increasing amid a volatile market in part spurred by the collapse of Terra’s algorithmic stablecoin earlier this year and the subsequent bankruptcies of centralized platforms, such as crypto lender Celsius.

“Opportunity in any type of hedge fund comes from inefficiency,” the executive said. “You can’t ask for a more patently inefficient sector that’s tradable in large quantities than crypto in general even when the markets are going up, let alone when they’re still suffering from the bruises from the losses that folks took and the meaningful loss of important institutional players.”

Opportunities for hedge fund growth

McBrady is joining Strix Leviathan as the firm is finishing the rebuild of its trading infrastructure to allow the system to better ingest a broader array of data.

Founded in 2018, the company serves institutions, fund of funds, single family offices, and high-net-worth individuals. It currently manages $50 million in assets. 

Strix Leviathan’s flagship Nest Fund seeks risk-adjusted returns to a buy-and-hold basket of digital assets by using statistical models.

“The Nest Fund has captured 70% of the upside and only 30% of the downside, largely by having a really rich suite of risk management signals,” McBrady said. “So the first a-ha [moment] was these can be very easily repurposed into features that can be turned into alpha-seeking signals.”

McBrady said the firm’s research efforts are focused around building market-neutral strategies that complement the Nest Fund.  

The new strategy head is also being tasked with helping Strix Leviathan “beef up” its Aurora Fund — a strategy looking to deliver market-neutral yield generation through low-risk arbitrage and liquidity provision strategies on DeFi platforms. 

Finding opportunities in DeFi can be done in part through measuring data such as blockchain activity, McBrady said, as well as examining the supply and demand metrics of a liquidity pool. 

“A big chunk of it is understanding — especially if you’re making bets on earlier stage layer-1 tokens — ‘Is this healthy? Is the ecosystem going to grow? Are people finding this useful?’” he said. “[A lot] is out there for the world to see, so it’s really just a function of whether you can channel your efforts in the right direction of getting the useful stuff.”

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