Goldman Sachs Exchanges Bigger markets, more alpha: Capstone’s Paul Britton on running a derivatives hedge fund
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Feb 28, 2025 Paul Britton, Founder and CEO of Capstone Investment Advisors, delves into the evolution of the derivatives market and the art of managing risk. He shares his experiences from the 2008 financial crisis, emphasizing the need for strong risk frameworks. The conversation highlights the current low VIX amidst economic turmoil and the competition between hedge funds and private assets. Britton also discusses leadership qualities, balancing curiosity with consistency, and the impact of AI in finance, all while maintaining personal values like humility.
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Early Success and Scalability
- In January 2008, Paul Britton's firm profited from volatility around a European bank's disclosed issue.
- This "aha moment" solidified his belief in the scalability of a sizable capital, risk-taking business.
Seeking Solace in Crisis
- During the 2008 financial crisis, Paul Britton sought solace and clarity at Trinity Church amid extreme stress.
- His frequent visits led to conversations with the clergy, who became interested in market volatility.
Derivatives Market Evolution
- The derivatives market has evolved to become more mainstream and accessible to a broader audience.
- Increased volume and diverse participant motivations create greater alpha opportunities for firms like Capstone.