Jeff Talpins's Element Disbands Group of Non-Core Managers

(Bloomberg) -- Jeff Talpins’s hedge fund Element Capital Management is dismissing seven portfolio managers as it refocuses on its main macro strategy, according to people familiar with the matter.

The managers were part of a program the New York-based firm started about five years ago that oversaw non-core parts of the portfolio, said the people, who asked not to be identified because the matter is private. The amount of money they oversaw was a small portion of Element’s $18 billion, the people said. A representative for the firm declined to comment.

Talpins, who manages the majority of the firm’s capital, decided to close the program because it wasn’t as effective as the core strategy, said the people. The decision is a strategic one to refocus the firm on its main style of macro investing, with trades based on political and economic trends, rather than the fundamental analysis of individual wagers. The firm employed about 62 people, with 32 in investment advisory roles, as of a March regulatory filing.

Element is one of the most sought-after hedge funds because of its solid returns, even when the broader strategy fell short -- particularly in recent years. It has annualized gains of almost 21% since its 2005 inception.

But markets proved challenging for the hedge fund last month. Element lost 3.5% in May, paring gains for this year to 3.2%, the people said. The firm had been up about 7% through April, after surging 17% last year.

Macro managers had a difficult May, falling 1.3% on average on an asset-weighted basis, according to Hedge Fund Research Inc. They’re up just 0.4% for the first five months of the year. Meanwhile, the hedge fund industry lost 1.4% last month, paring returns for this year to 2.8%.

--With assistance from Suzy Waite.

To contact the reporters on this story: Katia Porzecanski in New York at kporzecansk1@bloomberg.net;Melissa Karsh in New York at mkarsh@bloomberg.net;Bei Hu in Hong Kong at bhu5@bloomberg.net

To contact the editors responsible for this story: Alan Mirabella at amirabella@bloomberg.net, Josh Friedman, Vincent Bielski

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