Billionaire Michael Platt decided to close his hedge fund firm, BlueCrest Capital Management, to outside money last year as investors pulled out.
BlueCrest now focuses on managing Platt's and employees' money — and has had a huge year, returning 40%, according to a Bloomberg News report.
The firm decided to trade with high levels of leverage, or borrowed money, Bloomberg reported.
Last year, the then $9 billion firm received a wave of redemptions from big investors, like pensions and endowments, as performance wavered.
From January 2012 through January 2015, the flagship fund "performed poorly with an annualized return of 0.65% net of fees," according to a consultant report for the Employees' Retirement System of Rhode Island.
"It is no longer a particularly profitable business to run a multi-manager hedge fund on 2 and 20% fees,"Platt told the Financial Times last year. "Instead we are happy to be our own client and run our own amount of leverage. We are going from earning 2 and 20 on clients' money to earning 0 and 100 on our own."
The firm had also drawn criticism for an internal fund that managed employees' money and produced higher returns than the fund for outside investors. That arrangement was said to be under investigation by the Securities and Exchange Commission as of earlier this year, Bloomberg reported.
SEE ALSO: $3.7 BILLION HEDGE FUND: 'Perhaps we need to put our phones down and get back to work'
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