Element Capital Management, the macro trading hedge fund led by Jeff Talpins, returned over $6bn to investors in 2024, reducing its assets under management to $3bn, with internal capital now accounting for 90% of that total, according to a report by Bloomberg.
The report cites an investor letter as revealing that the firm made its fifth and final capital return at the end of last year, and has now returned a total of $15bn to clients over the past five years. Combined with withdrawals after the fund raised its incentive fees, Element has seen its assets shrink from a peak of $18bn.
The capital return aligns with Element’s strategy to scale back on external investors and focus on managing a leaner portfolio to deliver higher returns.
The decision to downsize follows a challenging period during which Element’s flagship fund experienced a cumulative 20% loss between 2021 and 2023. However, the fund rebounded strongly with a 22.5% gain in 2024, Bloomberg News previously reported. Talpins raised the fund’s performance fees to 40% in 2019, emphasising his commitment to prioritising returns over size.
In deciding to reduce external assets, Element joins a number of other prominent hedge funds that have opted to return investor capital to remain agile, including Citadel, DE Shaw & Co, and Point72 Asset Management.
In the letter to clients, the firm announced its transition to “Element 2.0,” which will focus on “diversification, innovation, and growth”.
“We plan to broaden our investment strategies and asset classes, both within our traditional macro strategy as well as outside of our flagship macro hedge fund,” the firm wrote.
As part of this evolution, Element is preparing to open an office in Abu Dhabi, joining other hedge funds such as Brevan Howard, Marshall Wace, and Kirkoswald Asset Management in establishing a presence in the emirate.
