McCabe's fund-of-funds rebirth

Blackstone Alternative Asset Management had better brace itself for some homegrown competition. Carrie McCabe, BAAM's former president and CEO, has been running her own, eponymous consulting business for the past five years. But now the well-known evangelist for hedge funds has signed on to lead London-based fund of hedge funds Financial Risk Management's stateside expansion. FRM has more than $13 billion under management, compared with BAAM's $9 billion.

The ebullient McCabe, 46, will be the first CEO of the British firm's U.S. affiliate, FRM Research. Although FRM has had an office in New York since 2001, it has had a tough time competing with established U.S. firms: Only about 10 percent of FRM's assets come from U.S.-based clients.

Blaine Tomlinson, CEO of the London parent, has high hopes that McCabe -- who as a consultant helped giant pension fund CalPERS and several multinational companies build their hedge fund portfolios -- will be able to attract new business.

"I don't think we could have chosen anyone better to fulfill our strategic ambitions in the U.S.," Tomlinson says. "Carrie has a very deep understanding of the market."

McCabe, who is equally excited about working with Tomlinson, came to the job in an unusual way: She was planning to launch her own fund of hedge funds, and had even lined up three potential joint venture partners, when a casual talk with Tomlinson about how hard it was to recruit good executive staff in the U.S. sparked the idea of collaboration.

"The more I thought about it, the more I liked it," she says. "I've built a business before, but why should I do all of that when I can join a like-minded group that has terrific resources -- both qualitative and quantitative -- and hit the ground running? This is perfect."