Smaller and younger multi-strat funds are having a rough year. Its prohibitively expensive for them to replicate the tech, risk and talent scale that Citadel, Millennium, P72, etc have. In the last two years I've had MANY discussions with smaller, younger multi-strats about how hard it is to find and retain good PMs. And very few have the tooling to monitor and improve PMs when they struggle. So they're always short-staffed and chasing marginal talent. A friend at one multi-strat in Asia told me the only way for them to compete with the big platforms is on culture. They have to find PMs that don't want the pressure and lifestyle of a larger pod shop. I've heard the same from newer US multi-strats in interviews etc. Does that sound like a talent edge? Or having the necessary platform in place to compete? Richard Waddington and I were talking about multi-strats recently and discussed the possibility that one of these smaller, newer firms has a high profile blow up that acts as a black eye for the strategy. This Financial Times data isn't that, but it certainly paints a picture of how it could happen. #hedgefunds #riskmanagement #investing
After almost a decade where they were the hottest hedge fund strategy in town, the performance of multi-managers has been mediocre-to-rubbish lately. Is this a sign of a durable shift, or just a bad spell?
Securities Finance | Prime Brokerage | Treasury | Portfolio Finance | Investment Management
11moThanks Steven Quimby for the insights. Very thought provoking. As we discussed briefly, I’m also very mindful about what is around the corner for smaller funds in particular with the final phase of Basel III.