As the world's biggest hedge fund investor, Blackstone backs new hedge funds, invests alongside hedge funds, buys majority stakes in them and offers internally run hedge funds to clients like pension funds and foreign governments.
The unit, known as BAAM, is on track to post its best-ever year, with revenues and earnings topping last year's records and assets at a record high.
McCormick, 53, told the firm of his plans to leave last week and will stay on for a time to ensure a smooth transition, two sources familiar with the move said.
Since McCormick took the helm of BAAM in January 2018 all businesses have expanded.
He replaced Tom Hill, who spent decades growing Blackstone into the world's most powerful hedge fund investor. The fund-of-funds portfolio, BAAM Principal Solutions, gained 13.3% over the last 12 months, outpacing the hedge fund industry benchmark.
In January Blackstone hired Joe Dowling, a former endowment chief at Brown University, as the group's co-head. He will now run the hedge fund unit alone, one of the sources said.
The Wall Street Journal first reported news of McCormick's departure.
McCormick, who has worked at Blackstone for nearly 17 years, is the latest senior executive to announce plans to leave the storied private equity firm's hedge fund unit.
In the last months Gideon Berger, who led its funds-of-funds business; Brett Condron, who was head of individual investor solutions; and Scott Soussa, who headed the hedge fund and private equity stakes business, have departed.
A number of other executives have also left, creating some unease among investors. Some investors have asked for Blackstone to hand over organization charts so they can keep track of who has left, one of the sources said.
A trained lawyer, McCormick was widely respected by investors and colleagues for his cerebral, calm and considered approach. He launched the firm's data-science initiative and was a tireless backer of bringing hedge funds to the masses through mutual fund structures.
Dowling came to Blackstone as an outsider and leaned on his deep connections with stock-oriented fund managers. He has quickened the pace of sourcing managers and has shifted investments more to equity managers while curbing the exposure to credit managers, the sources said.
He has also helped launch Blackstone Horizon, a new investment platform run by Scott Bommer, which aims to deliver big returns by investing with fund managers targeting fast-growing public and private companies.
Blackstone has signaled to clients that it is not abandoning its focus on preserving capital but is also focusing on faster growth with products like the Horizon platform.
(Reporting by Svea Herbst-Bayliss, Editing by Franklin Paul and Mark Porter)
By Svea Herbst-Bayliss