Cantab Capital Partners

Cantab Capital Partners
Industry Hedge Fund
Founded 2006
Headquarters City House
126-130 Hills Road
Cambridge CB2 1RE
United Kingdom
Area served
 Worldwide
Key people
 Dr. Ewan Kirk
(Chief Investment, Executive Officer and Partner)
Erich Schlaikjer
(Chief Technology Officer and Partner)
Products Systematic macro investment
AUM Increase US$ 4,500 million (2015)
Website www.cantabcapital.com

Cantab Capital Partners is a hedge fund based in Cambridge, England, co-founded by Dr. Ewan Kirk and Erich Schlaikjer. Cantab operates quantitative funds using computer models to drive investment decisions.[1] As of Feb 2015 Cantab had $4.5 billion in assets under management, after launching with $30 million in 2006.[2] The firm takes its name from Cantabrigia, the medieval Latin name for Cambridge.[3] It is regulated in the UK by the Financial Conduct Authority.

Funds

Cantab's stated investment philosophy is that algorithmic trading can help to overcome cognitive biases inherent in human-based trading decisions, by exploiting persistent statistical relationships between markets. Taking a multi-asset, multi-model approach, the majority of Cantab's traded instruments are liquid futures and forwards, across currencies, fixed income, equity indices and commodities.

Cantab manages two investment funds: the CCP Quantitative Programme (launched 2007, with $30m) and the CCP Core Macro Programme (launched 2013). Both are computer-based algorithmic trading systems, also known as automated trading, black-box trading, algo trading or systematic trading.

In January 2013, Goldman Sachs became a minor investor in Cantab. Kirk is a former Goldman partner; Schlaikjer is a former Managing Director and European Chief Technology Officer of Goldman's Quantitative Strategies Group. Cantab is reported to have been granted access to Goldman's technology infrastructure.[4][5]

Performance

At the end of December 2014 Cantab's leading fund, the CCP Quantitative Fund, had gained 39.3% over the previous 12 months. The fund gained 13 percent over January 2015 alone. These gains brought the fund to an annualized return of 11.38 percent since inception in March 2007; the Quantitative fund now has $3.5bn in assets under management. [6]

The Financial Times and The Wall Street Journal reported that Cantab's 2014 results took place in the context of renewed investor interest in computer-traded funds and commodities-based funds.[7][8]

Fee structure

Cantab’s Core Macro Programme is notable for its fee structure, charging a 0.5 per cent management fee and 10 per cent of profits. Industry-standard fees among hedge funds are often 2 percent of assets and 20 percent of profits. Although algorithm-based hedge funds tend to offer lower fees, made possible by their technological infrastructure, The New York Times reported that Cantab had "...lowered the fees to a point that not everybody can afford to do.[5] Some industry experts, such as Robert Leonard of Credit Suisse, believe that such commission levels are unsustainable.[9]

Employees

Cantab is largely staffed by mathematicians and scientists, many of whom have ties to nearby University of Cambridge.[5] In a 2013 interview with the Financial Times, Kirk said “We have made a commitment to investors that we have no plans to be bigger than 80 professionals."[10]

Cantab Capital Institute for the Mathematics of Information

In 2015 Cantab donated £5 million to launch the Cantab Capital Institute for the Mathematics of Information at Cambridge University. The research institute will use mathematical science techniques to analyse data for application in fields such as medicine, meteorology, urban planning and financial risk analysis. The Institute will have six lecturers and up to 18 Ph.D. students.[11]

The Institute was set-up in order to address the lack of philanthropic funding for data research, and to stimulate cutting-edge research in the area. In an interview with Pensions and Investments, Kirk said "...it is much easier to get funding for medical science or computer science [than for] more theoretical subjects like mathematics”. Kirk also characterised the donation as "philanthropic” and that the firm plans to keep its research in-house, while maintaining a "rewarding dialogue" with the Institute.

References

  1. ↑ Jones, Sam. "Quant funds suffer dismal 'QE' losing streak". Financial Times. Retrieved 19 August 2014.
  2. ↑ "Quant Funds Feel Investor Bite After Underperforming Three Years". Financial Advisor. Bloomberg News. Retrieved 19 August 2014.
  3. ↑ Lindsay, Margie (14 Jun 2012). "CCP Quantitative Fund: Cantab Capital Partners". Risk.net. Retrieved 22 August 2014.
  4. ↑ Turner, Giles. "Cantab co-founder departs". Financial News. Retrieved 19 August 2014.
  5. 1 2 3 Alden, William (May 13, 2013). "Forging Its Own Path, British Hedge Fund Finds Success". NYTimes.com. Retrieved 22 August 2014.
  6. ↑ "Archived copy". Archived from the original on 2015-03-08. Retrieved 2015-03-09.
  7. ↑ Grene, Sophia. "Happier Times Ahead for Commodity Hedge Funds". FT.com. Pearson. Retrieved 9 February 2015. the Cambridge-based Cantab, were among t
  8. ↑ Copeland, Rob; Fletcher, Lawrence. "Computer-Driven, Automatic Trading Strategies Score Big". Wall Street Journal. News International. Retrieved 9 February 2015. Recent market volatility caught many investors flat-footed. Among the few winners were traders who let a computer be their guide. Hedge-fund managers who employ complicated, automatic-trading strategies made millions off the wild swings in currency and commodity markets in recent weeks, investors said. Many of these so-called quants...performed well because they positioned themselves ahead of market moves that befuddled traditional investors. In many cases, they ramped up bets on the momentum against the euro and reaped a huge win when the Swiss National Bank removed its currency peg
  9. ↑ "Hedge funds unlikely to adopt Cantab Capital Partners' fee structure anytime soon". COOConnect. Retrieved 19 August 2014. I tend to doubt that we will see many managers charging a 0.5% or 1% management fee, and a 10% performance fee in the foreseeable future
  10. ↑ Jones, Sam (24 Jan 2013). "Numbers game makes Cantab a tour de force". FT.com. Pearson. Retrieved 19 August 2014. Culture is not an emergent property, as we would call it in maths. We have to be hyper aware of it
  11. ↑ Baker, Sophie. "Cantab donation adds up to new research center". PIOnline.com. Crain Communications Ltd. Retrieved 22 November 2015. On choosing to donate to Cambridge, Mr. Kirk said Cantab was looking to “support something that is blue-sky thinking and in an area where it is harder to get philanthropic funding."
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