Eisler to Shut Hedge Fund Amid Talent War and Poor Returns

Edward Eisler is closing his eponymous investment firm after weak returns, shrinking assets and ballooning staffing costs hindered his efforts to push into the multistrategy hedge fund world.

Eisler Capital Multi Strategy Fund is winding down and returning capital to investors, the firm told clients on Monday in a letter seen by Bloomberg News. Clients are unable to withdraw their money while the firm liquidates its trades, with the aim of distributing the proceeds early next year. 

The London-based firm said its returns failed to keep pace with expectations, while the battle to recruit and keep top traders capable of deploying capital at scale has only grown more expensive.

“After careful consideration of these factors and others, including the application of projected 2026 costs on an anticipated smaller capital base, we are no longer confident of our ability to achieve the fund’s investment objective,” the letter said. “The most responsible course of action now is to return capital to our investors.”

The retreat marks the clearest sign of mounting pressure on multistrategy hedge fund challengers and shows just how tough it is to grab a seat at the top table dominated by the likes of Millennium Management, Citadel and DE Shaw & Co. A toxic cocktail of high fees, cash withdrawals and poor returns can swiftly turn into a death spiral for a business model powered by teams of expensive traders investing across markets. 

Eisler’s multistrategy hedge fund, which reported a negative return of 1.7% this year through August, has about 250 staff helping to manage assets of $3.2 billion. That’s down from $4 billion a year ago. The firm said the fund generated annualized gains of 7% since inception.

Hedge funds across all strategies have gained 7.4% on average this year through August, according to data compiled by Bloomberg. 

Painful Costs

Eisler, 56, started his hedge fund in 2015 following two decades at Goldman Sachs Group Inc., where he’d swiftly ascended the ranks — becoming partner by the age of 30, muscling his way into new derivatives markets and eventually climbing the corporate ladder to run its trading division. Born in Russia and raised in Austria, he worked alongside a gilded generation of Goldman bankers destined for the asset-management big time, including Carlyle Group’s chief executive officer Harvey Schwartz and Pablo Salame, Citadel’s co-chief investment officer.

His firm initially started as a macro trading firm and built a decent track record before starting to transition into a multistrategy hedge fund in 2021, hoping to juice the firm’s earnings by making dispersed bets across multiple teams of traders. After some initial success, it faced a tough couple of years. 

Eisler cut 15% of its workforce earlier this year, mostly in tech, middle and back office roles, in an attempt to streamline the company while its remaining traders worked to turn around its investment performance. Last year, the firm even imposed punishing pay clawbacks on traders who quit, in the hope of stemming the exodus of talent to rival funds.

Organizations like Ken Griffin’s Citadel and Izzy Englander’s Millennium have reached such scale that they can pay millions of dollars to lure the best traders — forcing competitors to spend big, often by charging investors pass-through fees, in order to keep up.

“The economics of the multistrategy model — with its heavy infrastructure, high pass-through expenses, and dependence on large teams of traders — favor those with vast capital bases and diversified revenue streams,” said Bruno Schneller, managing partner at Erlen Capital Management. “Without sufficient scale, even well-regarded firms can find the operational and financial demands of this business model unsustainable.”

Eisler’s restructuring this year was aimed at reducing the firm’s pass-through expenses to 2022 levels and leaving more of the profits generated for investors. The firm charged clients $244 million in pass-through expenses in 2023 and almost $200 million the year before.

“Following the liquidation of the fund’s portfolio, any remaining investment vehicles and the investment management operations of the Eisler Group will be wound down,” the firm said in the letter announcing its plan to close.

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