Quant hedge fund to spin out of Tudor in record $9bn launch
Xantium to separate from company controlled by billionaire Paul Tudor Jones II next year
A hedge fund within US investment firm Tudor is planning to launch as an independent firm with $9bn in investor assets, in what is thought to be the biggest so-called spinout in the sector’s history.
Quant-focused hedge fund Xantium, which employs around 300 people, is set to formally leave the company controlled by billionaire Paul Tudor Jones II in the first half of next year, according to people familiar with the matter.
It will set up independently with capital from its parent firm, the people added, but it is not clear if Tudor will hold an equity stake. Xantium and Tudor declined to comment.
Most of Xantium’s $9bn in capital today is external money, with the rest made up of investments from Tudor, Xantium’s leadership and some of its employees.
The largest hedge fund spinout to date is thought to be Leda Braga’s quant fund Systematica, which separated from Michael Platt’s hedge fund BlueCrest in 2015 with $8.4bn in assets.
More recently, macro-portfolio manager Diego Megia left Millennium Management with its blessing to launch his new firm Taula in 2024, with $5bn.
Data shared with the FT by specialist providers suggests that Xantium will be the biggest hedge fund spinout to date, if it goes according to plan.
Xantium was founded within Tudor in 2019 by Oliver Watson and Sergey Levin, formerly senior quants in the equities division of US hedge fund giant DE Shaw. The pair specialised in computer-driven trading strategies using data and mathematical models to predict equity market movements, joining Tudor in 2012.
The fund blends quantitative trading methods with human-led trading, similar to DE Shaw, although the majority of the risk is taken by computers, the people said. Xantium invests across asset classes including equities, commodities, bonds and foreign exchange and manages a single fund which encompasses all of its strategies.
Xantium has reached a size that it makes more sense to operate as an independent firm, according to the people. It has offices in London, New York, Salt Lake City and Abu Dhabi.
The launch comes at a difficult time for hedge fund debuts. The operational and legal costs to set up an independent fund have risen over recent years. Meanwhile, multi-manager hedge fund behemoths including Izzy Englander’s Millennium and Ken Griffin’s Citadel have dangled enormous sums to top portfolio managers to work for them rather than going it alone.
Hedge fund executives say that a new manager now needs to raise hundreds of millions of dollars from investors before a launch to help ensure its success.
Tudor has a long history of supporting new hedge funds. Arguably its biggest success was backing New York-headquartered quant Two Sigma, which is now one of the world’s largest hedge funds.