Morgan Stanley has taken a minority stake in Traxis Partners, the hedge fund group founded by Barton Biggs, Morgan Stanley’s outspoken former chief strategist.
The terms of the deal will not be disclosed but people close to the matter said Morgan Stanley bought less than 20 per cent of the $1.5bn fund, which invests in equities, fixed-income, commodities and other securities around the world.
Morgan Stanley and Traxis disclosed the transaction in a letter to Traxis investors. Traxis is expected to invest a substantial portion of proceeds from the stake sale back into Traxis funds, where Morgan Stanley is also expected to invest capital.
The purchase is the latest in a series of hedge fund stakes taken by Morgan Stanley, which is eager to increase the alternative investments that it can offer pension funds and wealthy individuals.
Last year, Morgan Stanley bought a 19 per cent stake in Lansdowne Partners, the London-based asset management group.
The bank also bought FrontPoint, the US hedge fund group, and then took a minority stake in Avenue Capital, a hedge fund specialising in distressed debt.
Assets under management at Lansdowne and Avenue have increased about two-thirds since Morgan Stanley acquired its stakes, people close to the matter said. Both now have about $20bn under management.
FrontPoint’s multi-strategy fund was up 21 per cent for the year through October. Its financial services fund was up 50 per cent and its fixed-income opportunities fund was up 47 per cent, according to people familiar with the performance.
Mr Biggs founded Traxis after leaving Morgan Stanley in 2003. Unlike some other global macro funds, Traxis has performed well during the credit squeeze and was up 23 per cent for the year through October. It is up 13 per cent on an annualised basis since inception.
He spent 30 years at Morgan Stanley and became well known for his strong views on global market developments. Mr Biggs has published Hedgehogging, an insider’s look at the hedge fund world, based on his personal diaries.