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(Bloomberg) — Jeff Talpins’ macro trading hedge fund, Element Capital Management, returned more than $6 billion last year, shrinking its asset base and moving closer to primarily money management internal
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The company made its fifth and final return of capital at the end of the year, reducing its assets to $3 billion, according to a letter to investors seen by Bloomberg News. About 90% of assets are now internal cash.
The move is part of Element’s plan to have fewer outside investors. He has shifted to lower asset management in a bid to produce higher returns amid three straight years of declines that saw his fund lose around 20% between 2021 and 2023. The fund gained 22.5% last year, Bloomberg News reported.
Talpins, one of the hedge fund industry’s most sought-after macro traders that boosted performance fees to 40% in 2019, is among money managers trying to avoid the pitfalls of being too big and less nimble. Many have stopped raising new money, while others such as Citadel, DE Shaw & Co and Point72 Asset Management have opted to return some of their cash.
Element has been closed to new money since 2018. It has returned about $15 billion to clients over the past five years, according to the letter. Combined with withdrawals after the fund raised its incentive fees, Element has seen its assets shrink from a peak of $18 billion.
The firm is also gearing up for what it calls “Element 2.0” which will include new business capabilities, expansion into new areas, making some hires, as well as investing and partnering with external fund managers.
“Our path forward through Element 2.0 will focus on diversification, innovation and growth,” the company told clients. “We intend to expand our investment strategies and asset classes, both within our traditional macro strategy and outside of our flagship macro hedge fund.”
Element is also preparing to open an office in Abu Dhabi, joining peers such as Brevan Howard Asset Management, Marshall Wace and Kirkoswald Asset Management in expanding into the emirate. Abu Dhabi will be the company’s third global office aimed at enhancing business execution capabilities and the ability to attract talent, according to the letter.
A representative for New York-based Element, which sent the letter to customers on Tuesday, declined to comment.
