(Bloomberg) -- Jeff Talpins’ macro trading hedge fund Element Capital Management returned more than $6 billion last year, shrinking its asset base and stepping closer to managing mostly internal money.
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The firm made its fifth and final capital return at the end of the year, bringing down its assets to $3 billion, according to a letter to investors seen by Bloomberg News. About 90% of the assets now is internal cash.
The move is part of Element’s plan to have fewer outside investors. It has shifted toward managing lower assets with a goal of producing higher returns amid three successive years of declines that saw its fund lose about 20% between 2021 and 2023. The fund made 22.5% last year, Bloomberg News has reported.
Talpins, one of the hedge fund industry’s most sought-after macro traders who raised performance fees to 40% in 2019, is among money managers trying to avoid the pitfalls of becoming too big and less nimble. Many stop raising new money, while others such as Citadel, DE Shaw & Co and Point72 Asset Management have turned to giving back part of their cash.
Element has been closed to new money since 2018. It has returned about $15 billion to clients over the last 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 preparing for what it calls “Element 2.0” that will include new trading capabilities, expansion into new areas, making some hires, as well as investing and partnering with outside fund managers.
“Our path forward via Element 2.0 will be focused on diversification, innovation, and growth,” the firm told clients. “We plan to broaden our investment strategies and asset classes, both within our traditional macro strategy as well as 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 to the emirate. Abu Dhabi will be the firm’s third global office aimed at boosting trade execution capabilities and ability to attract talent, according to the letter.
A representative for New York-based Element, which sent the letter to clients on Tuesday, declined to comment.