Can Bobby Jain build the next hedge fund giant?

0:00What happens next in the story of money? Nuveen has spent over 125 years helping clients answer this question. By investing in the growth of businesses, real estate, infrastructure and natural capital, we continue to deepen our expertise across income and alternatives so investors can confidently write the next chapter of their own portfolio stories. Nuveen. Invest like the future is watching. Visit nuveen.com slash future to learn more. Investing involves risk. Principal loss is possible. When it comes to hedge fund managers, Bobby Jane is pretty much royalty. Bobby has a really strong reputation on Wall Street for being really charismatic.

0:42And he honestly comes off as just very warm.

0:45Amelia Pollard: He's not as brash, perhaps, or as boastful than perhaps how you'd imagine a typical high-flying hedge fund manager. But he has a quiet confidence about him and he's quite good with people. Those are my colleagues Amelia Pollard and Costas Morselas, who cover hedge funds at the FT. So Bobby Jane got his start at Credit Suisse and then went on to work as basically is Englander's right-hand man at Millennium, which is one of the biggest hedge funds in the world. It's at Millennium that Bobby Jane cements his place as something of a prince in the industry. And things go well for a while. But seven years in, Bobby Jane decides to leave.

1:27to build, well, the next millennium. I want to bring you some breaking news because we want to talk about Bobby Jane, the former co-CIO at Millennium Management who is forming his own hedge fund, expected to be one of the biggest hedge fund launches ever. He is slashing...

1:42Amelia Pollard: Jane set out to launch his own multi-manager hedge fund and rival the biggest firms in the industry, such as Citadel and Millennium. Now, his ambition here is huge. He would be pitting himself against some pretty tough competition. Citadel and Millennium basically have a leg up on everyone else. These are among the oldest and biggest multi-manager firms in the industry. Millennium runs about$77 billion in investor capital, and Citadel runs$67 billion. But given Bobby's rank, he seems pretty well-placed to succeed at building a rival to these giants. I think there's a sense that if anyone were to be able to pull this off, it would be Bobby Jane.

2:24One year on, though, Amelia and Costas tell me that Jane has found that it's far from easy to build a kingdom. It's been a tough first year for Bobby Jane, compared to rivals that have generally beat him. We've been so interested in how Jane Global does because it's the latest example of building a rival in this space. And his first year shows just how many barriers there are between the vision of wanting to launch a fund at this scale and actually pulling it off.

2:54I'm Safiya Ahmed from the Financial Times, in for Michela Tendera. It's been just over a year since multi-manager hedge fund Jane Global started trading. And the firm's performance so far is a rare window into just how hard it is to compete in this space. Today on Behind the Money, we're walking through the obstacles Jane Global has hit in the last year. And if even Bobbi Jane is finding the going tough, does anyone stand a chance?

3:33Building a rival to hedge funds like Citadel and Millennium is a huge undertaking. They're a type of hedge fund called a multi-manager or a multi-strategy firm. These multi-managers are basically hedge funds built of teams. So you have different portfolio managers that specialize in different asset classes. So you might have one or even a few who specialize in global equities or FX and rates or energy commodities. Each team that Amelia is describing is almost like its own mini hedge fund focused on trading a specific asset class. And each of those teams falls under the umbrella name of Millennium or Citadel, what have you.

4:14Amelia Pollard: The reason why this is the hottest sector of the hedge fund industry, why all these investors have been clamoring for years, is because of the central promise that multi-managers offer, which is they will deliver returns every single year, whether there's a correction or not. So there are plenty of other hedge funds that really try to make huge gains in a given year, 20%, 30%, 40%, if the market conditions are right for bonds or equities, if there's a big AI rally. But what investors really love and want to gain from multi-managers is these consistent returns year after year. Costas tells me that investors typically eye a minimum 8 % returns from these multi-managers, which isn't anything super shiny.

5:00But the investors that these funds appeal to really value steadiness over anything else. These investors are like the biggest pension funds in the world, the biggest university endowments in the world. These are not institutions that are looking for 30 percent returns necessarily. They want stability, like their entire reason of being is stability. These multi-manager firms promise, as Costa said, returns even in a downturn. But building a fund that can do that is very expensive.

5:32Amelia Pollard: These are incredibly complicated institutions to get right. You need to hire the best talent, you need to retain the best talent, you need to convince the best talent to stay with you. You need to have amazing technology so that this talent can trade effectively. And you need to have great risk management so that no one portfolio manager blows up the hedge fund. It's a very delicate dance and it takes a while to get right. Citadel and Millennium pioneered the multi-manager strategy back in the 80s and 90s. So it's safe to say that they have a pretty big head start on everyone else. Citadel and Millennium have been around for decades.

6:08So that many years of experience on your belt and that many assets are both contributing hugely to the fact that they can run very efficient and relatively lean machines, even though they're managing so much money. The head start that Citadel and Millennium have doesn't scare Bobby Jane away, though. He sets out in June 2023 to launch a rival firm called Jane Global. But as soon as he tries to get off the ground, things get tricky.

6:36Amelia Pollard: So most hedge funds, including multi-managers, they launch with a single strategy. So it might be a credit trader launching a credit hedge fund or a macro trader launching a macro hedge fund. These funds will perfect that one specialty area and then add on new trading strategies and asset classes as they grow. But Bobby Jane has tried to launch with seven different strategy areas. it's extremely difficult to get seven different strategy areas humming all from go. Getting even just one or two or three of these strategies right is a very difficult task. So in addition to the seven strategies, they also had this goal of launching everything around the world.

7:17And so they had offices in New York, but they also had one in Houston and one in London and one in Hong Kong and one in Singapore. And so logistically, you know, getting that off the ground, you need office space. You need to manage getting the tech there and making sure that kind of all systems are a go. And so the ambition and goal that he set from day one was just unlike any launch we'd seen before.

7:45Are there any benefits to launching like that? Seven strategies at once all over the world. It sounds incredibly ambitious considering how multi-managers typically launch.

7:59Amelia Pollard: Yeah, there are pros and cons that come with that. The pros are that from day one, he's diversified, which means that if there's a good year in bonds, he can take advantage of it. If there's a great year in equities, he's there to take advantage of it. And that diversification can really boost returns year after year. But the downside is that even for a single portfolio manager to set up their own hedge fund specializing in bonds, for instance, or equities, having that edge where they're better than the market, they're better than Citadel and Millennium, they're better than many of their peers, and they can get great returns every year.

8:33Amelia Pollard: that is really, really hard. The markets are brutal. And getting that right across seven strategy areas with hundreds of people, lots of teams, that is even harder. And it requires so much organization. It needs great risk management and really top technology. This, as you can imagine, turns out to be quite expensive. And fundraising becomes an immediate challenge. Jain even has to drop his fundraising goal of$8 to$10 billion down to$5 to$6 billion. So the problem that Bobby Jain had was that he had lots of successful meetings with investors, but some privately were wondering, since this is such a difficult thing to pull off from day one, why not wait a few years?

9:20Amelia Pollard: Why not see if he can really do it? There's a reason why Citadel Millennium are the top of the pack. They've been doing this for 30 years. They've had lots of time to perfect the culture, the technology, the talent retention. And to get this right from year one is difficult. So why not wait a little bit, see how it goes and then invest? And that was the number one hurdle they had to reach a higher fundraising target. Despite facing a tough time raising money, Jane eventually pulls off his launch, albeit with less money than he originally hoped for, around$5.3 billion. And so Jane Global begins trading on July 1st of 2024.

10:03But the difficulties don't end there.

10:12Okay, Amelia, Kostas, I want to bring us up to the present now. It's August 2025, So it's been just over a year since Jane Global launched with its seven strategies and started trading. How is it performing? So in the first 12 months, they've notched net returns of 2.7%. And just take a step back of what that means. That means that after investors have paid all the fees associated with hedge fund performance and asset management, etc., they've returned 2.7 % on top of that. That number is a bit of a ways off from Citadel's 9.3 percent and Millennium's 9.9 in the last year. The fact that they've made 2.7 percent in the first 12 months is not great.

11:00And I think investors were prepared for this first year to be a moment of getting off the ground. That being said, I do think it shows just how big the challenges are. So what exactly has happened over the last year that has made it so hard for Jane Global to hit its stride? The first has to do with its capital. Even though Jane Global raised$5.3 billion, they did not have all the money in their bank accounts day one, which posed some problems for them. Basically, it arrived over the course of the first year in phases. And so the hedge fund received chunks of capital at different periods of time over the first year.

11:43But the problem that emerged is that they were hiring and setting up a firm to be able to eventually manage$5.3 billion, which means you have all of the costs associated with that already pulling money out of the account day one. And so you had a little bit of a mismatch where you have the costs of a firm that's supposed to be managing$5.3 billion, but you don't have the capital to deploy or invest that can really reap the returns and gains of a$5.3 billion fund. So they were basically trying to run like a$5 billion firm with like a quarter of that capital at the beginning or something? Yeah, like at first it was, and I don't know the exact breakdown, but yeah, at first it was just a fraction of$5.3 billion.

12:24And then halfway through the year, another infusion came in. And so that just created some planning difficulties. And do we know why it was structured that way? Is that typical for these kind of firms launching? No. So Exodus Point, when they launched in 2018, which was the biggest hedge fund launch ever, they had all of their money day one. And so some of this was a push and pull with investors of not necessarily wanting to give them the money if it was going to just be sitting in a bank account kind of waiting to be deployed. And so you have this chicken-egg problem of which comes first? Do you get the money or do you have the infrastructure set up to invest the money?

13:01So that's the first problem. But on top of that, there's an even bigger obstacle facing the aspiring multimanager. Talent. Kostas and Amelia both tell me that talent is critical in this industry. I mean, talent is really everything. We cannot emphasize that enough, how much it matters that you have the right portfolio managers. And, you know, effectively, a hedge fund is just an aggregate of the best talent out there. There's a direct correlation between how well you do and the people you have working for you. But when it comes to Jane, the firm can't access talent either. At least not right away.

13:38And it isn't for lack of interest. So one big component to this is that the industry is riddled with non-compete clauses. So non-compete agreements basically mean that they're employment contracts that you sign that prevent you from working for a competitor for a certain amount of time. Many of them today are around 24 months, give or take. And Jane Global found that when they went out to hire, ostensibly dozens, eventually more than 100 portfolio managers and investing professionals, that many of these people had non-compete. So even if you hire them on X day, they might not be able to start until two years later.

14:17Wow, okay, so there's just no way for him to totally staff his operation. Exactly. They're in Nantucket right now or somewhere else like Ibiza. And so that has been a big problem for Jane. And in one instance, for example, there was a big hire from Citadel and he was brought on for a job that didn't really exist for him ultimately when he joined 18 months later, two years later, whatever it was. So existing employees, ones that had started before him, were able to basically fill those gaps and spaces. And as a result, there wasn't the same job that he had been hired for two years prior. This poses the biggest issue to Jane Global in its first year, because talent in this industry is really what makes or breaks one of these firms.

15:01Amelia Pollard: I think it just also gives a clue as to the challenge of just setting up the right culture as well in that you'll hire people and they'll start at the firm a year later, 18 months later, whatever it is. And then you realize that actually, you know, it's not the perfect fit in terms of you, Bobby, trying to set up a hedge fund and your vision of how a certain strategy should be traded. And then the portfolio manager has a different view. And this is something that could keep happening as more people join the firm and Jane Global establishes its own identity, its own approach to markets. And again, this is the other advantage that firms such as Citadel Millennium have.

15:41Amelia Pollard: They've had 30 years to get their culture right, to figure out what they like, what they don't like, how they like their portfolio managers to trade, how they don't like them to trade. But Jane Global is new and it's going to take some time to refine that. So that's why Jane Global has had a rough start, a very grand vision of launching seven strategies at once all around the world, coupled with struggles accessing capital and talent, have made for a tough first year. But can Bobby Jane's fund pick up steam in its second year of trading? The future of fixed income investing will continue to blur the lines between public and private markets.

16:24Nuveen's credit platform was built to navigate this shifting landscape, channeling capital toward the businesses, infrastructure and energy solutions that are shaping tomorrow's economy, all while aiming to deliver the resilience and returns that portfolios seek today. Nuveen. Invest like the future is watching. Visit nuveen.com slash future to learn more. Investing involves risk. Principal loss is possible. So we've talked about the obstacles that have been barriers to entry for Jane Global becoming a multi-manager. But now the firm is entering its second year of trading. I'm curious to know, Amelia Kostas, what do you think Jane Global has going for it in terms of achieving its goal of rivaling Citadel or Millennium?

17:12So the first six months of 2025, Jane Global has really found its footing a little more. So its returns have been in line with that of Citadel Millennium. So that's a sign that things may already be picking up steam. But aside from that, he's got a few other things going for him. The first is that Citadel Millennium have been generally closed to new investors for the last chunk of years. And this is because they've essentially hit their capacity of how much money they think they can manage before they start to literally have diminishing returns. And so that means that there's definitely white space or gap where investors who are looking to get that exposure to regular steady returns and very diversified strategies are looking to put their money somewhere.

17:54And so that could very well be Jane Global. Another thing is that with their seven strategies, you know, if they can effectively get them all off the ground and start hitting their stride in the next couple of years, you are ensuring a pretty high level of stability. You know, if you can manage risk well and really kind of have the levers going to generate the steady returns that Sedell Millennium have, you know, Jane Global could very well attract the next big wave of capital. The third thing is that – so even though they already are managing$5 billion, compared to who they are hoping to compete against, they are effectively a startup.

18:35And so one thing is that investors might be interested in working somewhere that is getting off the ground and is figuring out its culture as it goes. And so even though there will inevitably be growing pains in that endeavor, you know, it might be nice to work somewhere that's not so institutionalized and so baked in to how it's been operating for decades and presumably will be running for years.

18:59Amelia Pollard: I think that is fair. You know, if you're a senior portfolio manager and you really want to make an impact in an organization, perhaps you can take a leadership role at Jane Global, whereas that might be more difficult at Millennium or Citadel. What do you think is perhaps working against Jane Global here? Like what will be maybe the toughest challenge going forward? Is it going to be one of those issues that we mentioned, like with accessing capital or talent? It's a good question. I mean, I think as we, like the points we hit on of capital, structure issues, hiring talent, the non-competes have been a huge problem within that realm for them.

19:39Inevitably, a lot of these challenges will fade away as time passes just by design. Like these are structural challenges with the goal they set out to accomplish. Beyond that, I mean, talent is really everything.

19:51Amelia Pollard: I agree. I think the biggest challenge might end up being talent retention and making sure that once they have good people that are working well and putting out good numbers year after year, they need to make sure that they keep them. Because once you lose them, performance can really suffer. And that makes capital raising more difficult. It makes it more difficult to convince your investors that things are going well. And the reality is that financial resources really matter in this space. Having tens of billions versus five billion mean that you have far more flexibility to snap up the best talent.

20:24Amelia Pollard: And this could prove to be a challenge for smaller players such as Jane Global, that they may not be able to retain their very top talent. And that could relegate them or keep them at a second tier. Okay, now I want both of your predictions. Do you think that Bobby Jane will be able to do it? maybe as his firm gets a little older? Will he be able to build a true rival in the multi-manager space? I think he has a shot, but it's going to be a long, difficult road and it's going to require many years of effort and it is going to be a struggle. The competition is very, very fierce. It's not just Citadel Millennium.

21:08Amelia Pollard: They're competing with other players such as Point72, D.E. Shaw, Walleye. There's so many in this space. So it's going to be very, very difficult. And it's going to be years of hard graft. Yeah. And I think the real test will be the first huge market correction we have beyond the just like 10 % we had in April with Liberation Day. But, you know, some really kind of like earth shattering market moves is when I think real winners and losers are minted. Right, since the hallmark of these firms is promising returns even when there might be a crazy downturn in the market. Yeah, exactly. And we haven't really seen that in years beyond the COVID blip of crazy correction.

21:56So I agree. I think Jane Global definitely has a shot. The fact that they have 380 people on board and a lot of these structural issues are going to fall away this year. So this will be the first year, the one ahead of us. That's a true test of how they perform in the market without all these other kind of wrinkles in the design of just how hard it is to get off the ground. So I guess we'll have to check in a year from now. Yeah, that's a great point. We should check in a year from now. Yeah, see how he does in year two. A lot of people have told us, investors and otherwise, like talk to us in a year.

22:28So we're going to hold them to that and we will definitely be talking to them in a year and see how it went. Perhaps we'll have to do that on Behind the Money too.

22:40Today's episode was hosted by me, Safia Ahmed. It was also produced by me with help from Michela Tendera. Sound design and mixing was done by Sam Giovinco, and original music is by Hannes Brown. And a special thanks to Kat Rudderpulli. Topher Forges is our Acting Global Co-Head of Audio. See you next week.

23:11The future of fixed income investing will continue to blur the lines between public and private markets. Nuveen's credit platform was built to navigate this shifting landscape, channeling capital toward the businesses, infrastructure and energy solutions that are shaping tomorrow's economy, all while aiming to deliver the resilience and returns that portfolios seek today. Nuveen. Invest like the future is watching. Visit nuveen.com slash future to learn more. Investing involves risk. Principal loss is possible.