(Bloomberg) -- Hedge fund Kuvari Partners is preparing to return all external capital as its founder Vikram Kumar turns the investment firm into a family office amid pressure piled on smaller hedge funds by the rise of multistrategy giants.
Kumar’s decision has been spurred by a challenging market environment for his strategy, which focuses on mid-cap stocks and one that’s being increasingly dominated by bigger industry rivals, as well as personal reasons, he said in an interview on Tuesday.
The rise of multistrategy firms has led to a concentration of equity returns in a handful of mega-cap stocks, changed market patterns and induced extreme bouts of short-term volatility, impairing the likely return profile for fundamental long-term stock pickers such as Kuvari, he said.
“This has also created significant investable gaps in our universe, which on one hand are as attractive as I have seen for some time, but on the other I do not foresee closing in this market and industry structure currently,” Kumar said. “The pendulum will turn in due course, but for now it is only fair to return capital to our allocators.”
Following the sudden demise of his father and the arrival of his first child, Kumar said he was also rebalancing his family priorities after running money for almost 17 years.
Kuvari managed peak assets of $2 billion until 2022, which have since declined to under $1 billion. His hedge fund has posted 9% annualized return before fees since its debut in 2013, he said.
©2024 Bloomberg L.P.
