Kuvari Partners, the hedge fund founded by Vikram Kumar, is set to return all external capital as the firm transitions into a family office amid mounting pressure on smaller hedge funds from the dominance of multi-strategy hedge fund giants, according to a report by Bloomberg.

The report quotes Kumar as citing both personal reasons and a difficult market environment for his decision. The rise of multi-strategy firms has concentrated equity returns in mega-cap stocks, altering market dynamics and fuelling short-term volatility, making it harder for long-term, fundamental mid-cap stock pickers like Kuvari to thrive.

“The market and industry structure have created significant investable opportunities in our universe, but I don’t foresee these gaps closing in the current environment,” Kumar said in an interview on Tuesday. “While the pendulum will eventually swing back, it’s only fair to return capital to our allocators now.”

At its peak, Kuvari managed $2bn in assets until 2022, but those assets have since fallen below $1bn. The fund has achieved a 9% annualised return before fees since its launch in 2013.