Eisler Capital’s decision to shutter its flagship multi-strategy fund has reignited debate over the sustainability of the pass-through fee model and the escalating cost of talent across the hedge fund industry, according to a report by Reuters.
The closure, announced last week, highlights how London-based entrants are struggling to replicate the scale and economics of dominant US multi-manager platforms such as Citadel, Millennium Management and Balyasny.
Eisler, which adopted a pass-through structure – passing operating and compensation costs directly to investors alongside a 15–20% performance fee – saw its turnover rise more than 40% year-on-year, according to filings reviewed by Reuters. However, staff costs surged over 900% in five years, outstripping revenue growth and eroding returns to investors.
Industry observers say the case underscores a broader challenge: as portfolio manager pay inflates – some top hires in London and New York now command packages exceeding $100 million – newer firms without deep capital bases face shrinking profitability and rising investor pushback.
While US heavyweights continue to attract capital into their multi-strategy complexes, European allocators have grown wary of fee-heavy pass-through models. Research from Barclays shows investors in such funds now capture less than half of trading profits – acceptable during years of outperformance, but harder to justify amid weaker returns.
London remains home to major hedge fund operators such as Marshall Wace and Rokos Capital Management, though the city’s 171 managers pale in comparison to New York’s 900-plus, according to PivotalPath.
