How Rokos stayed true to its big-bet roots and became the old-school manager every investor wants

Billionaire Chris Rokos still runs the majority of his firm's portfolio, which is rare for a fund of its size.

Les Wilson; BI

• The $19 billion manager Rokos Capital is an outlier in the increasingly institutional hedge fund industry.
• Its billionaire namesake, who was a cofounder of Brevan Howard, runs the majority of the portfolio.
• While multistrategy funds are attractive for their diversification, Rokos is appealing for its big bets.

Investors in the billionaire Chris Rokos' eponymous hedge fund had reason to celebrate the reelection of Donald Trump.

The firm made nearly $1 billion in profits the day following Trump's victory, Bloomberg first reported, pushing its year-to-date gains to more than 28% through mid-November.

The macro manager, now running $19 billion, made money across asset classes following the election, when US stocks ripped upward, the dollar strengthened, and Treasury yields jumped — as did many funds that put on the "Trump trade" before the election.

But very few firms the size of Rokos Capital Management have so much of their portfolio concentrated with a single risk-taker. While Rokos has hired quasi-portfolio managers who can put on trades — known in the firm's parlance as "investment officers" — the firm's founder still runs the majority of the portfolio, several people close to the firm said.

As the hedge fund industry's titans have shifted away from macro philosophers to business-building executives, Rokos is a throwback to a time when names like Stanley Druckenmiller and George Soros were on the top of every allocator's wish list.

And the anachronistic London-based manager has ridden its strong performance and, ironically, the movement away from its style of investing to its record size. The biggest investors in the world — sovereign wealth funds, pensions, endowments, and more — now need diversification in their portfolios from the sprawling multistrategy managers that often move as a group and put on similar trades.

Against this backdrop, Rokos stands out for its lack of correlation with the industry's biggest names.

"Pensions need the volatility," one Rokos investor at a US pension told Business Insider. Limited partners in Rokos include Canada's main pension fund and Blackstone, people familiar with the firm said.

And after raising another $2 billion in assets earlier this year, Rokos is not slowing down, industry insiders said. The firm declined to comment.

'Deprived' of his abilities

The 54-year-old Oxford-by-way-of-Eton grad cut his teeth at UBS, Goldman Sachs, and, finally, Credit Suisse, where he spent a little over three years trading alongside Alan Howard.

In 2002, Howard, Rokos, and three other Credit Suisse traders left the now-defunct Swiss bank to launch Brevan Howard (the "R" in Brevan is for Rokos). A decade later, the star trader left the manager hoping to start his own investment firm.

A five-year noncompete agreement stopped any immediate plans, though, despite Rokos' lawyers arguing that the sit-out period would leave the public "deprived" of his "skills and hard work."

Eventually, Rokos and Howard settled their dispute, and Howard even backed Rokos' new manager, reports at the time said. Rokos Capital Management launched in the fall of 2015, quickly growing to $3.5 billion before closing to new money.

In a preview of things to come, Rokos profited from Trump's first election in 2016 — the manager returned close to 20% in its first full year of trading.

Nearing its 10th anniversary, Rokos today resembles the original Brevan more so than the current iteration of Howard's manager. Brevan, which has seen its assets rise and fall thanks to uneven performance over the past decade, is structurally closer to multistrategy managers like Citadel and Millennium as it diversifies assets across risk-takers around the world.

When Brevan launched, Howard was the biggest risk-taker; Now, he no longer trades for the manager, BI reported earlier this year.

Headquartered on the posh London strip known for its bespoke tailoring, Roko's firm has a "Savile Row style" of customization for its founder. The team and research functions are molded to his way of investing, a former employee told BI, even down to the font and color coding of reports.

Savile Row, located in London's Mayfair neighborhood, is home to a number of bespoke tailors.

Dukas/Universal Images Group via Getty Images

The goal of the firm's dozens of investment officers, analysts, and researchers — regulatory filings show that 60 people perform "investment advisory functions" across the firm's London and New York offices — is to be his "eyes and ears," this person said, adding: "When he had a question, there was a number we could find to answer it."

Rokos' superpower is his ability to monitor positions like "a human quant." One person who worked with him said he knows the positions put on by his investment officers better than they do, despite managing a much larger book.

This person also said he could stay steady in areas he's confident in, even if markets move against him in the short term.

"He's willing to wait through cycles if he believes the risk is worth it," another person who worked for him said.

A demanding place

It wasn't the plan for Rokos to be the only one putting on trades when the firm launched, people familiar with his thinking at the time said, though that was the reality for a number of years.

Several people at the firm at its start said the issue was that he couldn't find people who thought and traded exactly like him. These people said it's a physically demanding place that requires working long hours alongside a founder who constantly questions everything.

"He has a relentless pursuit of the truth," one person said.

As a result, the firm has cycled through several executives and management structures over the years. Mark Edwards, a former Goldman Sachs managing director who joined Rokos at its launch, stepped down from his CEO perch earlier this year, triggering a slew of changes.

Matthew Sebag-Montefiore, a onetime partner at the consultant Oliver Wyman, is now the CEO, while Pria Bakhshi was promoted to the global head of strategic solutions. Quita Ramirez joined last December as the global head of business development, investor relations, and communications from Schonfeld. Dmitry Green and Lauren Fairbairn, both partners, left this year.

Still, Rokos has worked to delegate some of the risk-taking to others. One investor estimated he takes 60% to 70% of the firm's risk, and that may continue to go down.

Several people close to the firm said he's hoping to add more investment officers, specifically in equities. The exact number of investment officers the firm employs is unclear, though a LinkedIn review shows 17 with the title, many of whom are also partners.

Volatility wanted

While it's counterintuitive, the manager's biggest selling point might be the roller-coaster nature of its returns. A 44% surge in 2020 was followed by a 26% drop in 2021. In 2022, when the S&P 500 dropped more than 18%, the manager had its best year on record, with a 51% gain.

With worries the industry might be hitting peak multistrategy, managers with a higher risk-return profile should be more common, the billionaire AQR founder Cliff Asness wrote earlier this year.

Alternatives "are generally more effective in higher-vol versions," he wrote but "mostly (not entirely) missing from the market today and should take on a bigger role."

As Brevan has transformed into a more diversified platform, and the likes of Louis Bacon, Michael Platt, and David Tepper have returned outside capital, allocators and industry insiders said it's hard to find a peer of Rokos'.

Jeffrey Talpins' Element Capital mostly runs internal money after returning funds at the start of the year, and Said Haidar overhauled his manager after a 43% loss in 2023. Paul Tudor Jones has expanded into quant strategies and seeded external funds, though he's still known for big directional bets.

Rokos, a press-shy billionaire whose media mentions are mostly about construction projects at his multimillion-dollar properties, including a 100-bedroom manor that dates to the days of Henry VIII, is in a league of his own, one investor said.

The limit to the firm's growth, this person said, is going to be internal restraints, not external interest.

"He could raise another $2 billion with a snap of his fingers," this person said.

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