ExodusPoint Hedge Fund Raises $3 Billion, Rejects Billions More
(Bloomberg) -- ExodusPoint Capital Management has raised more than $3 billion in about four months -- and turned away billions more -- defying the outflows hitting the broader hedge fund industry.
The fund, which was launched by Michael Gelband and Hyung Lee in June 2018, already oversees about $8.8 billion. The commitments came from new and existing and investors and, starting in April, will be drawn down in portions over the coming quarters, according to a person with knowledge of the matter. The firm had more than $6 billion of investor demand and had been closed to new cash since October 2018.
The inflows run counter to the industry broadly. Investors yanked nearly $100 billion from hedge funds globally last year, the most since 2016, according to eVestment.
The fundraising follows lackluster returns from ExodusPoint, whose $8 billion launch was the biggest ever. The fund trailed most of its major multistrategy rivals last year, when it returned 6.8%, and in 2018, when it returned less than 1%.
Still, ExodusPoint -- which has sizable exposure to fixed income and has been building out its equity unit -- wasn’t badly hurt by the coronavirus-fueled selloff that battered many funds late last month. ExodusPoint rose about 0.6% in February, the person said, in line with its multistrategy peers, while the S&P 500 Index sank about 8%. The fund is up 1.8% year-to-date.
ExodusPoint will wait until it has fully invested its previous capital before tapping the new cash, the person said. As of November, it had put to work about 85% of its capital. The firm plans to boost allocations to its 65 portfolio managers and hire more.
ExodusPoint’s early popularity stemmed in large part from Gelband’s track record. He was bond chief and heir-apparent at Izzy Englander’s hedge fund Millennium Management, which oversees more than $40 billion. Earlier this year, Millennium also raised $3 billion from investors, attracting the capital even with stringent terms.
Drawing down capital over time allows ExodusPoint to put the cash to work in stages and avoids potentially angering investors by charging fees on money that hasn’t been invested. With the fresh stockpile, the firm is now again closed to new cash.
A spokesman for the New York-based firm, which has 435 employees across nine offices globally, declined to comment.
©2020 Bloomberg L.P.