Capula Investment Management just hired another trader from Goldman Sachs. Puzhong Yao, a former Goldman rates trader and vice president on Goldman’s XVA rates desk joined Capula’s London office as a trader.
Yao’s arrival at Capula follows that of Matt Reid, a former Goldman credit derivatives trader, who joined in March. Capula is partly owned by Goldman’s Petershill fund, which bought a stake in it eight years ago.
Yao’s exit from Goldman comes as the bank is cutting costs and trimming headcount in its fixed income business. While many fixed income hedge funds have had a difficult year, Capula has performed well in 2016: it reportedly posted gains of 7.5% through to June.
Yao’s path to Capula is informative for anyone who would escape banking for a hedge fund these days.
A Cambridge University graduate (first class degree in economics), he first joined Goldman in 2007, whereupon he spent six years on the inflation desk. In 2013, he threw it all in to take a two year MBA at Stanford Graduate School of Business, the launchpad for many a career in Silicon Valley. After a summer internship at a big data company in Seattle, however, Yao returned to Goldman in London where he spent 12 months on the XVA desk for Goldman’s rates business.
XVA desks aggregate all the counterparty and funding risks associated with particular trading books and enable banks to hedge against them in bulk and to use their capital and collateral more efficiently. As such, XVA desks offer traders an unusual degree of leeway and are about as close as you’ll get to proprietary trading in a post-Volcker world (assuming the Volcker Rule is, eventually, introduced). Yao seems to have used Goldman’s interest rate product (IRP) XVA desk as a launchpad into a hedge fund career. Other traders might want to do the same.