Key Takeaways
- • Hedgeweek's "Ones to Watch" report, produced with support from Marex, suggests 2024 could see more than 40 new hedge fund launches from managers at $1bn+ hedge fund firms, a notable rebound after a difficult few years.
- • Planned launches include a multi-billion-dollar fund led by Bobby Jain, formerly co-CIO at Millennium, alongside launches from managers formerly at Millennium, Citadel, Elliott Management and CQS.
- • Hedgeweek's survey found 70% of emerging managers believed private wealth firms were showing more interest in emerging funds than a year earlier, with nearly 90% in Europe reporting the same.
- • Expectations of falling interest rates have lowered the return hurdle hedge funds must clear against the risk-free rate, improving allocator sentiment according to Monterone Partners' Phillip Chapple.
- • Long/short equity posted its first positive month in almost two years in February with $1.5bn of net inflows, though this is small against $70bn withdrawn in recent years.
Summary
Jack Seibald, global co-head of prime services and outsourced trading at Marex, writes that 2024 is shaping up to be a strong year for hedge fund launches. Drawing on the Hedgeweek "Ones to Watch" report, which lists the 20 most exciting hedge funds and was produced with Marex's support, he argues that the launch pipeline reflects a genuine revival after a period that Ken Heinz of Hedge Fund Research described as the most difficult launch environment he had seen. The report suggests more than 40 new launches could occur this year from managers coming out of $1bn+ hedge fund firms.
The quality of the pipeline is as notable as its size. A multi-billion-dollar fund led by Bobby Jain, formerly co-CIO at Millennium, is among the planned launches, with further launches from managers formerly at Millennium, Citadel, Elliott Management and CQS. Jon Caplis, founder of PivotalPath, says in the report that the activity "indicates a new confidence from talented managers to go out on their own." New launches began outnumbering closures last year, and the spillover into 2024 has increased emerging managers' optimism about allocator demand.
Hedgeweek's survey found 70% of emerging managers believed private wealth firms were more interested in emerging funds than a year earlier, a pickup most pronounced in Europe, where nearly 90% reported greater potential interest. Roughly half of emerging managers globally reported more institutional interest than a year earlier. Macro considerations are also cited: expectations of lower interest rates reduce the return hurdle managers must clear against the risk-free rate. Phillip Chapple, COO at Monterone Partners, said allocator sentiment has shifted now that rate cuts are in sight. The report was produced before the Dow Jones Industrial Average surpassed 40,000, a milestone Seibald cites as evidence of improving sentiment.
The 20 funds span strategies and regions. Only six are equity-focused, down from 15 last year, with four major multi-strategy launches by former Millennium managers and macro and credit funds also represented. Geographically, 10 are in the United States, seven in Europe and three in Asia-Pacific. HFR's Heinz said "the multi-strategy model is strong and has never been stronger." Long/short equity showed tentative recovery, with net inflows of $1.5bn in February, its first positive month in almost two years, though this is modest relative to $70bn withdrawn in recent years. Hedgeweek described the hedge fund launch market as "back in business," suggesting 2024 could be a record year.
The quality of the pipeline is as notable as its size. A multi-billion-dollar fund led by Bobby Jain, formerly co-CIO at Millennium, is among the planned launches, with further launches from managers formerly at Millennium, Citadel, Elliott Management and CQS. Jon Caplis, founder of PivotalPath, says in the report that the activity "indicates a new confidence from talented managers to go out on their own." New launches began outnumbering closures last year, and the spillover into 2024 has increased emerging managers' optimism about allocator demand.
Hedgeweek's survey found 70% of emerging managers believed private wealth firms were more interested in emerging funds than a year earlier, a pickup most pronounced in Europe, where nearly 90% reported greater potential interest. Roughly half of emerging managers globally reported more institutional interest than a year earlier. Macro considerations are also cited: expectations of lower interest rates reduce the return hurdle managers must clear against the risk-free rate. Phillip Chapple, COO at Monterone Partners, said allocator sentiment has shifted now that rate cuts are in sight. The report was produced before the Dow Jones Industrial Average surpassed 40,000, a milestone Seibald cites as evidence of improving sentiment.
The 20 funds span strategies and regions. Only six are equity-focused, down from 15 last year, with four major multi-strategy launches by former Millennium managers and macro and credit funds also represented. Geographically, 10 are in the United States, seven in Europe and three in Asia-Pacific. HFR's Heinz said "the multi-strategy model is strong and has never been stronger." Long/short equity showed tentative recovery, with net inflows of $1.5bn in February, its first positive month in almost two years, though this is modest relative to $70bn withdrawn in recent years. Hedgeweek described the hedge fund launch market as "back in business," suggesting 2024 could be a record year.
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