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Abu Dhabi, UAEWednesday 12 December 2018

The rise of Bitcoin kicks off a new type of fund

Former Harvard portfolio manager starts a hedge fund focused on digital currencies

The rise of unregulated bitcoin exchanges is causing headaches for the Indian economy. Jim Urquhart / Reuters
The rise of unregulated bitcoin exchanges is causing headaches for the Indian economy. Jim Urquhart / Reuters

Lewis Fellas, a former portfolio manager at Harvard University’s US$35.7 billion endowment, is planning a hedge fund that invests in digital currencies such as bitcoin.

Fellas, who left Harvard Management in Boston last year, is launching Bletchley Park Asset Management in September, according to a person familiar with the matter. The fund, which is registered in the Cayman Islands, seeks to raise $200 million, according to the person, who asked not to be identified because the information is private.

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Fellas is Bletchley Park’s chief investment officer, and Ronnie Potel, a former executive at Morgan Stanley, is managing partner, according to the person and LinkedIn profiles for both men. The fund has been testing arbitrage strategies in the markets for these new currencies, according to the person. HFMWeek reported the fund’s launch on Thursday.

Digital currencies can be used to make transactions electronically and have proliferated with the success of bitcoin, which became the first decentralized cryptocurrency in 2009. Bitcoin, the largest digital tender, this week soared past $4,000 for the first time on growing optimism that faster transaction times will hasten its spread.

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Money managers have invested in blockchain -- the technology used for verifying and recording transactions -- and set up funds to speculate in the markets for the currencies.

Lewis was a portfolio manager focusing on Asian equity markets during his tenure at Harvard Management until he departed last year. Prior to joining Harvard in 2014, he was a portfolio manager in Hong Kong at Segantii Capital Management. He also worked as a trader at JPMorgan Chase.

A number of former Harvard portfolio managers have launched hedge funds in recent months as the endowment has downsized and reorganized. Harvard has backed at least two of the funds, TPRV Capital, a relative value hedge fund, and Cambridge Square Capital, which focuses on fixed income markets.