London hedge fund Eisler to shut down after lacklustre returns
Multi-manager firm says performance has not kept pace with expectations and cites cost of attracting traders
London-based hedge fund firm Eisler is shutting down amid a period of disappointing performance and the rising cost of attracting top traders.
The firm, which managed about $4bn in assets last year, has suspended investor redemptions from its multi-strategy fund to enable it to wind down its portfolio in an “orderly manner”, according to an investor letter seen by the Financial Times.
“[Recently] our performance has not kept pace with either our or your expectations,” said Edward Eisler, the firm’s chief investment officer and founder, in the letter.
Eisler, the former co-head of Goldman Sachs’ global markets division, had been trying to build a multi-manager hedge fund to compete with industry giants such as Citadel, Millennium and Point72, launching his fund in 2021.
Unlike other hedge funds that tend to specialise in a specific strategy or asset class, multi-managers have tens if not hundreds of teams of portfolio managers supported by analysts which trade multiple assets. But amid a fierce war for traders able to deliver big profits, Eisler had struggled to balance the expenses of hiring and retaining portfolio managers while maintaining a cost structure that was “acceptable” to its investors, the letter said.
“After careful consideration of these factors and others . . . we are no longer confident of our ability to achieve the fund’s investment objective of delivering superior absolute returns,” said Eisler.
The fund gained 3 per cent last year, 9.8 per cent in 2023 and 15 per cent in 2022, said people familiar with the matter. In the letter, Eisler wrote the fund delivered a compound net annual return of 7 per cent since inception in 2021.
The letter added the firm expected to wind down the fund’s portfolio by the end of the year, with initial payments to investors to follow “shortly thereafter”. After this, the firm said it would wind down any remaining investment vehicles and operations of the group.
Eisler declined to comment. The news was first reported by Bloomberg.
The decision underscores the intense competition in the multi-manager sector. The firm passed on most costs directly to investors instead of charging a management fee, a common practice among the industry’s biggest groups.
While the multi-manager sector has been the hottest corner of the hedge fund industry in recent years and top funds have generated huge profits for investors, the high costs these firms incur to build up top trading teams and technology systems can backfire if they fail to deliver strong performance.