(Bloomberg) -- Former Harvard University bond manager Marco Barrozo has launched a hedge fund as the industry comes off its worst year since the financial crisis.
Barrozo raised more than $125 million for Cambridge Square Capital, according to filings this month with the SEC. The fixed-income fund, located in Boston, has begun trading and is raising more capital, according to a person with knowledge of the matter.
Funds are proliferating around the region as Harvard Management, which oversees the $36.7 billion endowment, slashes staff as it tries to improve performance. The environment may prove challenging as investors balk at high hedge fund fees and lagging performance. More funds closed in 2016 than in any year since the financial crisis with liquidations totaling 1,057, according to Hedge Fund Research.
Until 2015, Barrozo was a portfolio manager at Harvard Management, where he invested in government bonds and interest rate swaps. A former trader at UBS and Goldman Sachs, Barrozo was hired in 2007 and was among the highest paid at the endowment in some years. He earned $4.8 million in 2013, mostly from a performance bonus, according to an endowment tax filing.
Cambridge Square is Barrozo's second venture after HSQ Capital, which he co-founded with Satu Parikh, who had headed commodities trading at the endowment and left at the same time. It was dissolved. Parikh said in a telephone interview that he's launched Psion Capital in Boston, but hasn't started fundraising.
SPIN OUTS
Harvard has been shuttering internal hedge funds and downsizing its trading desk as part of an ambitious overhaul. Narv Narvekar, the endowment's chief executive officer hired from Columbia University last year, announced the plans in January as he seeks to cut the number of employees by about half this year from 230 people.
Harvard said it would consider supporting portfolio managers who are losing their jobs as part of the downsizing this year if they spin out from the endowment. Harvard expects to make a commitment of $300 million to TPRV Capital, a relative value hedge fund started by Graig Fantuzzi and Michele Toscani, according to another person familiar with the matter.
Rene Canezin, a managing director who oversaw the trading desk at Harvard, is considering a spinout, with Harvard expecting to make another $300 million commitment, this person said. Canezin didn't return emails seeking comment. Harvard declined to comment.
OLDER FUNDS
Sanjiv Bhatia, a portfolio manager who oversaw a team investing in equities at the endowment, is setting up his own shop. Bhatia declined to comment.
Sid Sandilya and Robert Howard, who left Harvard last year, have formed Sierra Brook Capital in New York. At the endowment, Sandilya was a portfolio manager and Howard was a managing director on an equities team. Neither returned emails seeking comment.
While some successful funds emerged from Harvard Management more than a decade ago, others have struggled as returns have grown muted. Convexity Capital Management, a fixed-income hedge fund formed by the university's former investing chief Jack Meyer, has seen assets shrink in the past four years. Regiment Capital Advisors, started by former junk bond traders at the endowment, shut down its credit fund two years ago.
