- $15.3 billion quant firm Capital Fund Management is expanding in the US.
- The manager is planning to add dozens of new employees over the next five years.
- Partnerships with Stifel and iCapital brings the firm to new pools of capital, CFM's president said.
Despite its French headquarters, Capital Fund Management has long been connected to the US.
In 1991, when the quant manager was just forming, its first backers were from New York and Chicago, Philippe Jordan, the firm's president, told Business Insider in an interview in the manager's London office. Half of the firm's $15.3 billion in assets are invested in American markets, he said, and now they are planning an expansion across the pond.
Jordan said the firm is building up in America "at a significant rate for us." Currently, 40 people work for the firm in the States, and Jordan expects roughly 100 people in five years.
"It's like a mini CFM over there," he said, as the firm is trying to replicate all of the functions it has in its 300-person-strong Paris headquarters. The firm is hiring for all types of roles in New York — engineering, infrastructure, marketing and investor relations, and researchers.
"There's no way around the US" as a quant fund, he explained, which use a vast amount of data and historical trends to inform computer-driven investment strategies. The markets are the deepest and most liquid, and startup financial centers in the Middle East are not comparable, Jordan said.
The US is also a land with plenty of untapped capital.
The manager has partnered with Stifel and iCapital since the beginning of the year to distribute some of its funds, including the firm's Discus fund, which is up 5.9% through June, according to a person close to the firm. However, its flagship fund, Stratus, which is up 8.7% through 2024's first half, is hard closed to new investors.
Stifel is a St. Louis-based advisory firm with nearly $470 billion in client assets, while iCapital is a digital marketplace for alternative funds for tens of thousands of individual advisors managing close to $200 billion.
CFM's investor base is overwhelmingly institutional, and the manager sees the high-net-worth channel as a way of diversifying its business. The firm understands it won't be a quick lift — "it'll be a five-year process," Jordan said — but is excited about the opportunity.
Alternative managers have turned to the private wealth channel for capital increasingly in recent years, mostly driven by large private equity firms like Blackstone, Apollo, and KKR. Products like Blackstone's massive REIT have raised assets quickly, but have some predicting plenty of pain for in-over-their-heads retail investors.
Hedge funds may be the next to invest heavily into the channel — former Millennium exec Bobby Jain's new fund was backed from the start by well-known hedge-fund allocator Abu Dhabi Investment Authority, the massive sovereign wealth fund, but also the private bank platforms of Goldman Sachs, Morgan Stanley, UBS, and HSBC, Bloomberg reported. Tiger cubs like Tiger Global and Coatue have had long-standing relationships with JPMorgan's private wealth unit.
Hedge fund strategies are typically more complex, especially algorithmic traders like CFM, making them harder to explain to advisors and their clients. However, Jordan believes there's a better understanding of what they do now than 30 years ago when they were starting.
"You can't open a newspaper without seeing a headline about AI," he said, and generally people understand that has to do with crunching data. Quant funds operate in a similar fashion, he said, and the firm thinks this can be translated to a broader audience than just longtime hedge-fund allocators.
The manager hopes to eventually raise "hundreds of millions" from wealthy Americans for the Discus fund.
