London-Based Hedge Fund Firm Marshall Wace Moves Toward Crypto

London-based group becomes latest of its kind to seek new source of returns in nascent space.

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Sir Paul Marshall is chairman and chief investment officer of Marshall Wace LLP, one of Europe’s leading hedge fund groups.

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key takeaways

  • The firm is getting set to a launch portfolio that will buy stakes in privately owned, late-stage digital finance companies.
  • Could move to expand new business to include other forms of investment, such as trading digital currencies

Hedge fund firm Marshall Wace is reportedly the latest asset manager looking to invest in the digital assets space amid growing demand among allocators. 

Founded in 1997, the London-based firm manages more than $50 billion in assets and specializes in long/short equity. The company is now looking to invest in blockchain technology, digital currency payment systems and stablecoins, Financial Times reported.

Marshall Wace is seeking staff specializing in digital assets and plans to expand the young division to potentially trade digital currencies, according to the unnamed sources. 

A spokesperson for the firm declined to comment further on the decision. 

The news comes after a survey of executives at hedge funds around the world found that the senior professionals of those firms expect to allocate an average of 7.2% of their cash holdings in crypto in the next five years. Ninety-eight percent of the respondents plan to invest in cryptocurrencies in some capacity over that span.

Brevan Howard has begun trading in cryptocurrencies and billionaires Paul Tudor Jones and Steve Cohen have recently spoken up in support of cryptocurrencies. Jones called bitcoin a good portfolio diversifier, while Cohen, CEO of hedge fund manager Point72, said during a webinar that he has been looking into crypto and is now “fully converted.”

More recently, hedge fund Soros Fund Management was given internal permission to actively trade bitcoin, The Street reported last week. 

Matt Heater, head of investor relations and business development for digital asset investment firm Strix Leviathan, said he is not surprised to see traditional hedge fund managers like Marshall Wace beginning to trade in the space, noting that some are looking to chase the latest trend amid dwindling returns. 

“We see crypto as somewhat of a final frontier of hedge fund investing, where you can truly deliver on the original promise of hedge funds,” Heater told Blockworks. “…As allocators become more comfortable with the asset class you will likely see that trickle down into hedge fund strategies.”

Marshall Wace is also reportedly creating a portfolio that will buy stakes in privately owned, late-stage digital finance companies. Amit Rajpal, chief executive of Marshall Wace Asia and co-founder of Indian fintech firm Niyogin, is reportedly set to lead its launch. 

Venture capital firm Andreessen Howard announced the launch of a $2.2 billion crypto fund designed to discover the next generation of visionary crypto founders by investing in early seed-stage projects to fully developed, later-stage networks.

Meltem Demirors, chief strategy officer at CoinShares, previously said that as more capital enters the crypto ecosystem at later stages, company valuations get driven up and result in more allocators looking to enter the space, which she noted creates “a flywheel effect” for capital and valuations. 

Marshall Wace was one of about a dozen private equity, institutional and strategic investors in May to participate in $440 million of fundraising for Circle, a firm that helps businesses harness the power of stablecoins and public blockchains for payments, commerce and financial applications worldwide.

Though Heater said he expects more hedge fund managers to move into the sector, he noted that trading crypto comes with some unique operational and risk management considerations.

“New hedge funds entering the space will need to get up the curve fast to keep pace with others that have been operating for years,” he explained. “There’s simply no substitute for experience.”

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