New York-headquartered hedge fund Capstone Investment Advisors is set to shut its Hong Kong office after roughly four years, reflecting the growing challenges faced by smaller multi-strategy funds in Asia’s competitive markets, according to a report by Bloomberg.

The $11bn firm, founded by CEO Paul Britton in 2004, confirmed that six employees will be affected by the closure but stressed that it will continue trading Asian markets from its other global offices. Capstone, which specialises in derivatives and volatility trading across equities, fixed income, credit, currencies and commodities, operates 10 offices worldwide and employed 330 staff as of mid-2025.

The decision underscores the difficulties for late entrants in the region, where well-established global players such as Millennium Management and Point72 Asset Management, alongside local firms including Dymon Asia Capital and Polymer Capital Management, dominate both talent and capital. Capstone and peers like Verition Fund Management arrived in Hong Kong around 2021 amid the pandemic and heightened geopolitical and regulatory uncertainty, but maintaining a foothold has proved challenging.

Capstone had previously signalled ambitions to allocate $1.5bn of risk capital to Asia, highlighting opportunities in the region’s markets amid ongoing central bank policy shifts and currency volatility. Yet, as inflows to smaller multi-strategy funds have lagged behind those for established rivals, recruiting and retaining local talent remains a major hurdle, according to industry recruiters.