Even hedge fund royalty Bobby Jain is having a hard time starting a firm to compete with the industry’s giants.
The former co-chief investment officer at Millennium Management tried to pull off the world’s largest hedge fund launch last year. He had to settle for the largest launch since 2018 with $5.3bn in commitments from investors, after falling short of the initial fundraising target of $8bn-$10bn.
A year on from the start of trading, high costs and a slow build-up mean Jain Global is at the bottom of the pack of so-called multi-managers that it is seeking to challenge.
“This is a Darwinian world,” said one investor. “It tells you how hard it is.”
Jain Global declined to comment.
Investors said the fund had gained just 2.7 per cent in the past 12 months, a figure that puts it far behind the dominant duo of Citadel and Millennium on 9.3 per cent and 9.9 per cent, respectively.
However, people close to Jain say the hedge fund is still early in its innings, performance is in line with expectations and it had been no small feat to raise as much as he did.
“The first year for us was about setting the firm up for the future. We didn’t expect them to put up results that were similar to an established firm,” said another investor. “The real race is starting for them now.”
When Jain set out on his own, he modelled his new firm on the “pod shops” that have become the industry’s dominant forces.
The combination of multiple trading strategies, star portfolio managers, tight risk management and high leverage delivered steady returns year after year — and secured Ken Griffin’s Citadel and Izzy Englander’s Millennium $66bn and $75bn under management, respectively.
However, multi-manager platforms are also incredibly expensive businesses to run, with cutting-edge infrastructure needed to support trading and risk controls, plus intense competition for talent. Millennium this year offered one trader a $100mn package to lure him from rival Balyasny.
Jain Global’s humdrum performance illustrates the height of the barriers to entry.
Other new entrants — Balyasny in the early 2000s, or ExodusPoint in 2018 — had clear specialisms and used those as a base on which to add new trading strategies over time. Jain took the opposite approach. Instead of getting off the ground slowly, it began with seven different divisions on launch day last year: fundamental equities; equity arbitrage; commodities; computer-driven systematic; Asia-Pacific; credit; and macro and interest rates.
It was an ambitious and distinctive pitch, but it also came at a time when upstart firms across the industry were having difficulty fundraising, which brought its own challenges.
While Jain secured investor commitments of $5.3bn, the hedge fund did not have that full sum available to trade from the start. Instead, the firm has a drawdown capital structure, similar to that of a private equity firm. This means that it has called capital from investors in stages: one consequence of a competitive environment that handed early investors bargaining power.
The hedge fund also sweetened terms and slashed performance fees for investors willing to write big cheques. Some of its largest commitments came from the likes of sovereign wealth fund Abu Dhabi Investment Authority and a big US university endowment.
At the same time, Jain had to secure the talent necessary to run the firm at full capacity while near two-year, non-compete agreements have meant some new recruits have yet to begin trading, according to people familiar with the firm.
“The firm’s running the cost base of a $5bn firm but the capital deployment is about half that,” said one person close to the firm’s strategy. (The firm is now closer to 75 per cent deployment). “You have all the drag without the performance benefits.”
Other teething problems have hit. The firm has suffered a handful of departures in recent months. Paul Jefferys — who previously worked at Citadel and was responsible for risk rebalancing among other things at Jain — left at the end of June to pursue a career in artificial intelligence, according to two people familiar with the matter.
Chief technology officer Matt Croy and a team focused on event-driven strategies led by portfolio manager Josh Klaff have also left, they added. However, the departures are a small proportion of the overall firm’s ranks, which has grown to around 380 employees.
It also does not yet have the culture it wants, with two people familiar with the firm describing it as more akin to that of a bank. The seven different businesses have largely operated independently, according to two people close to the business, in large part because they have been focusing on deploying their own capital and making a profit.
But the firm has some breathing room. It has continued to recruit new portfolio managers, including credit specialists Niall Playfair from ExodusPoint and Herbert Filho from Morgan Stanley, and equity arbitrage traders Kevin Salmon from Bank of America and Michael Wong from Mountain Creek.
Its performance has been improving. Since the start of 2025, it has returned 2.2 per cent, according to two investors — right around the returns of Citadel and Millennium — despite not deploying all of its capital and although its traders are still to reach full velocity.
ExodusPoint, the last big launch with more than $8bn in 2018, took years to perform. It trailed its biggest rivals Millennium and Citadel until 2024, but over the past year appears to have finally hit its stride. In the past 12 months, it has returned 18.1 per cent. Balyasny, which sits between ExodusPoint and Millennium and Citadel in terms of size, returned 15.6 per cent in that time.
“Obviously, everyone wants to hit the lights out year one,” said one person familiar with Jain Global’s performance so far. “But given how Bobby structured everything, he never expected to be much further along than he was at the end of June.”
Jain has also structured its terms in a way that gives an element of stability to the business. Investors can only pull their money over the course of two years after an initial lock-up period, according to two people familiar with the terms.
That is not nearly as long as Citadel and Millennium which insist on four and five years, respectively. However, it is still much longer than most hedge funds which tend to offer monthly, quarterly or at most annual redemptions.
Investors keen to access the steady, through-the-cycle returns that the multi-managers have historically offered also have limited options. Both Citadel and Millennium are in large part closed to new investors, a restriction that may help second-tier firms raise new money.
Jain received the last tranche of the original capital commitments this month, heralding the end of the beginning for the new multi-manager.
“There has to be a ‘grace period’ to allow for scale and getting their feet under them,” said one big hedge fund investor. “The issue with Jain is perhaps just how big it is already and the expectations.”
