What’s going on here?
ExodusPoint Capital Management saw a $1 billion dip in its assets in the first half of 2024, dropping from $12.02 billion at the end of last year to $11.04 billion in June.
What does this mean?
The decline in assets at ExodusPoint is primarily due to client withdrawals, according to insiders. Despite reaching $13.1 billion in assets by December 2022, the hedge fund has been shut off to new investments since last year and hasn’t been replenishing capital. The fund’s performance, with gains of 3.6% through July 2024, lags behind the average multi-strategy hedge fund’s 6.3% gains as reported by PivotalPath. Contrast this with rival Citadel, which posted an impressive 8.82% gain during the same period. Changes within ExodusPoint have also contributed to the shake-up: co-founder Hyung Lee stepped down to become an adviser, while Michael Gelband took over as chief investment officer.
Why should I care?
For markets: A billion-dollar exodus.
The dip in ExodusPoint’s assets highlights a broader trend of investors becoming more selective about multi-strategy funds, a category commanding over $700 billion in the US. With global investor appetite waning for the most expensive funds in this category, competitors like Citadel are showing stronger performance metrics, effectively capturing the attention – and funds – of discerning investors.
The bigger picture: Shifting winds in hedge fund strategy.
The changing dynamics at ExodusPoint reflect larger shifts in the hedge fund industry. New players like Bobby Jain’s multi-strategy fund, despite launching with $5.3 billion, fell short of initial targets, signaling growing challenges in attracting capital. Funds like Citadel might continue to dominate unless others can adapt and innovate to meet evolving investor expectations for performance and cost-effectiveness.