HedgeCo.Net — Millennium Management is withdrawing more than $1.5 billion of leveraged capital from two external hedge fund managers after investment losses at both firms, Bloomberg reported. The multi-manager has redeemed more than $1 billion from event-driven manager Troluce Capital Advisors and a further $500 million from Axebrook Capital, the firm Jack Land founded roughly five years ago after leaving York Capital Management.
The withdrawals were reportedly prompted by the losses, although Troluce and Axebrook are expected to keep operating. Troluce has also recently broadened its trading beyond its flagship hedge fund strategy.
Millennium, which manages more than $95 billion, has leaned increasingly on external managers as part of its model, with dozens of its more than 370 investment teams operating outside the firm. The arrangement gives smaller managers access to substantial capital and infrastructure, but it also ties them to strict risk limits and leaves them exposed to fast withdrawals after underperformance.
Millennium itself has held up comparatively well, with an 8.1% gain for the year through September and broadly flat performance in the month.
The episode shows how asymmetric platform funding is. Capital that arrives in size can be taken back quickly, and the manager receiving it carries the drawdown risk but not the control over the funding. For allocators, it is a reminder to ask how much of a smaller manager’s gross exposure depends on a single platform’s balance sheet.