Stanley Fink returned to the high-octane world of hedge funds — after an absence of less than two months — when he became the chief executive of International Standard Asset Management (ISAM), a London-based commodities trader that specialises in gold markets.

The 50-year-old former Man Group boss, often nicknamed the godfather of hedge funds, joins forces with Lord Levy, the former Labour treasurer and personal envoy to Tony Blair, who becomes ISAM's chairman.

It is understood to be Lord Levy's first business appointment since he was caught up in the Government's cash-for-honours scandal more than two years ago. Lord Levy quit as Mr Blair's Middle East envoy when the former prime minister left office last year. Mr Fink retired as deputy chairman of Man, the world's biggest listed hedge fund manager, in July, after a career of more than 21 years. During this time, he transformed the firm into a FTSE 100 giant with assets of almost $80 billion (£44.7 billion) and more than 4,000 staff.

Mr Fink, a hugely influential City figure who is also an active philanthropist, wants to increase ISAM's assets under management tenfold over the next five years. That would transform the gold fund, which at present runs about $300 million, into a $3 billion player that could quickly command respect in commodities markets.

ISAM, which has been generating annual returns of around 15 per cent, operates a macro fund, which trades fixed income, foreign exchange and equity indices as well as commodities.

Mr Fink, who stepped down as Man's chief executive last year, said that he had been attracted by the prospect of building up a relatively small firm, where he could get to grips with day-to-day problem-solving. He also said that commodities were where the smart hedge-fund money was heading. Funds that speculate on markets from cocoa to oil futures are not dependent on liquidity from investment banks, cash-strapped amid the credit crunch. Less than 10 per cent of ISAM's cash is used to put on positions, he said.

The Manchester-born Mr Fink, a law graduate, joins at a tough time for commodities speculators, some of whom have been caught out by fluctuations in the oil price and a market rally among companies exposed to the sector. Ospraie Management, a $3 billion fund run by trader Dwight Anderson, was forced to shut its flagship fund this month after a series of bets went wrong.

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