Corporate history

FRM was founded in 1991 by Blaine Tomlinson as a London-based private family office and hedge fund research consultancy, with the belief that hedge funds represented a superior form of asset management and that the industry would become institutional. During the early 1990s, the firm sought to develop one of the most extensive sets of quantitative tools and hedge fund databases in the industry.

After six years as a research firm, in 1997, FRM began investing outside capital in portfolios of hedge funds and opened an office in Guernsey. The firm’s first commingled product was designed to produce absolute returns with low volatility and little or no correlation to equity and fixed income markets. While products with these goals are more common now, they were considered innovative at the time for combining sophisticated portfolio construction and manager selection to deliver hedge fund returns in a manner that reduced risk.

In 2000, FRM partnered with Morgan Stanley Capital International (MSCI), the leading international index provider, to develop MSCI’s hedge fund indices. MSCI turned to FRM for its well-developed hedge fund classification systems and databases. In the same year, FRM created its Business Risk Group, becoming one of the first funds of funds with a team focused exclusively on operational risks at hedge funds.

FRM began a global expansion, opening offices in Tokyo (2000), New York (2001) and Sydney (2001), and growing assets to USD10 billion by 2004 through a variety of multi-strategy and single strategy portfolios. During this period of growth, FRM invested heavily in its staff and investment infrastructure. The firm developed several specialised groups to ensure deep expertise in each aspect of the hedge fund industry, which itself was growing rapidly in size and complexity.

In 2007, FRM announced that it was evaluating the feasibility of a new seeding business, as it recognised that the institutionalisation of the hedge fund industry was increasing barriers to entry, creating the need for a new firm to assist a select number of talented managers as well as bring untapped investment opportunities to its clients. FRM made several senior hires to evaluate and subsequently structure the business, and in 2008, FRM announced the formation of FRM Capital Advisors, a new business dedicated to identifying new or early stage hedge fund managers and providing them with significant seed capital and guidance in building institutional-quality operations.