Metals traders are leaving hedge funds as markets disappoint

Specialists at firms including Balyasny Asset Management, BlueCrest Capital Management and Millennium Management have all left this year, according to people familiar with the matter, who asked not to be identified discussing private information.

Most of the employees involved joined in the past two years, as funds and banks bulked up their metals-trading divisions to take advantage of volatile markets as the world emerged from covid-19 lockdowns.

Employee churn is a familiar feature of multimanager hedge funds — which are famed for rapidly replacing underperforming traders — and some are still hiring. But the moves suggest that expanding into metals markets might be proving more challenging than expected.

Some hedge funds pulled back from trading contracts on the London Metal Exchange following last year’s unprecedented nickel short squeeze, which led to the exchange canceling billions of dollars worth of trades. The move, which the LME said was necessary to ensure its survival, drew widespread condemnation from money managers, and is now at center of an ongoing lawsuit.

At the same time, tighter monetary policy has weighed on key markets like copper, aluminum and gold, and China’s disappointing economic recovery has also been a drag on prices. One popular strategy among hedge funds this year included buying call options on copper futures, some of the people said, which can pay off handsomely if prices rise above a given level. But a lack of volatility has meant such bets will have left traders nursing losses.

At Balyasny, traders Juan Carlos Rasco and Joel Adams have left the firm, according to some of the people. Adams, who was previously a senior copper trader at Glencore Plc, said on his LinkedIn page that he joined the firm last year.

Balyasny is still hiring though: Wei Jie Tan — a former Cargill Inc trader — will join the firm in Singapore later this year, according to one of the people.

At BlueCrest, portfolio manager Brandon Rust departed the firm, some of the people said. Rust had been at BlueCrest since 2021, after joining from Engelhart Commodities Trading Partners, and is now a portfolio manager in commodities for Capstone Investment Advisors, which confirmed the hire when contacted by Bloomberg News. Metals trader Paul Crone also left BlueCrest late last year.

Millennium portfolio managers Benjamin Wright and Geoffrey Fila have left the firm, according to some of the people. Fila also joined Capstone, which the company confirmed, while Wright will rejoin commodity trader Trafigura.

Spokespeople for Balyasny, BlueCrest, Millennium and Trafigura declined to comment.

Despite the personnel moves, there aren’t yet signs of permanent retrenchment among hedge funds in metals. The sector is particularly exposed to the energy transition and US-China tensions, which could both present profitable opportunities for traders in the coming years.