Millennium Raises $3 Billion With Clients Accepting Strict Terms

(Bloomberg) -- Izzy Englander’s Millennium Management has raised $3 billion, attracting capital even with stringent terms that keep investors from pulling out their money quickly.

The share class open to new investments limits the amount clients can pull to 5% of their money each quarter, meaning it would take them five years to fully cash out. Millennium raised $4.1 billion in 2019, when it opened to new capital for the first time in two years. Now, it expects that to reach $7.1 billion by March, according to a Feb. 12 letter to investors.

Hedge funds are increasingly trying to secure investor capital over longer periods to avoid sudden mass redemptions if markets turn volatile. Millennium had withdrawals of at least $1 billion in 2008 as investors found themselves in need of capital during the financial crisis.

The firm’s growth shows that some big-name hedge funds with solid track records still have committed clients even as investors remain skeptical toward the industry. High fees and mediocre returns sparked accelerating redemptions industrywide last year.

Most of Millennium’s new capital will come from existing clients either reinvesting gains or adding fresh cash. The firm returned profits to investors in 2019 for the second year in a row, according to a person with knowledge of the matter, who asked not to be identified because the information isn’t public.

“The 5% quarterly share class will be the primary form of any new investment,” Englander wrote in the letter. A spokesman for the New York-based firm declined to comment.

Millennium’s multistrategy fund gained 9.8% last year and 13.7% annualized since 1990, according to the letter. The firm oversees more than $40 billion.

Other highlights from the letter:

• After a hiring spree, Millennium ended 2019 with “the largest number of portfolio managers in our history” -- more than 230. Much of the activity was in Europe and Asia.
• Millennium is pursuing “new types of quantitatively driven trading strategies.” As technology has advanced, the firm has worked to hire a wider array of quant managers.
• The firm has built up its infrastructure to “ingest, cleanse and curate data.” It manages more than 2,000 data sets across almost 400 providers, more than 10 trillion records of ready-to-use data and 2,000-plus terabytes of compressed stored data.

--With assistance from Katherine Burton.

To contact the reporter on this story: Hema Parmar in New York at hparmar6@bloomberg.net

To contact the editors responsible for this story: Sam Mamudi at smamudi@bloomberg.net, Josh Friedman, Alan Mirabella

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