Element Capital to Return $4bn in External Capital, Refocus on Managing Internal Funds

Element Capital Management, the global macro hedge fund founded by Jeff Talpins, is planning to return approximately $4 billion in external capital to its clients as part of a strategy to enhance its performance and refocus on managing its own funds, according to a report from Reuters.

Citing sources familiar with the situation, the report reveals that instead of returning capital on a pro-rata basis, following a challenging period where the fund experienced a 20% loss over the past three years, Element plans to scale back its client base. Smaller clients will be cut, while larger investors—some of whom pay higher fees—will be allowed to stay invested, potentially giving them an opportunity to recover their losses.

Element, which posted a 6.7% gain in the first quarter of 2024, charges most clients a 2% management fee along with a 40% performance fee. However, smaller investors, such as charitable organisations, foundations, and endowments, pay a reduced fee structure of 2% and 20%, respectively.

In addition to reducing external capital, Talpins is increasing his personal stake in the fund by adding $500 million of his own money. Once the capital has been returned to clients by the end of the month and Talpins’ additional investment is factored in, Element is expected to manage approximately $5 billion in assets, split almost evenly between external investors and the firm’s own capital.

Currently, Element Capital oversees around $8.5 billion in assets. This move to consolidate its assets reflects Talpins’ effort to refocus the firm and position it for more sustainable performance moving forward.