Multi-manager boom fuels new generation of hedge fund spin-outs

Large multi-strategy hedge funds have become a vital training ground for the next generation of independent managers as the pod-shops feed a growing pipeline of spin-outs.

In a recent AIMA podcast, Lawrence Obertelli, head of EMEA Prime Service Sales at Marex, said spending time at a large multi-manager firm is becoming a more common part of the journey towards launching independently as the platforms themselves continue to expand.

“There are increasingly large numbers of pod-shops and the pod-shops and the multi-manager shops that are there are getting larger themselves,” Obertelli said during the podcast examining the emerging hedge fund sector.

The trend builds on research earlier this year showing the proportion of new hedge fund launches coming directly from major multi-manager platforms almost doubled from 9% in 2023 to 17% in 2025.

Platform alumni pipeline expands

Millennium and Citadel accounted for more than a third of platform-linked launches last year, according to research from Borealis Strategic Capital Partners, although their combined share fell from 54% in 2023 to 37% as other firms produced more spin-outs.

Walleye, Balyasny, ExodusPoint, Eisler and Squarepoint were among the other leading sources of new managers.

The pipeline could continue expanding as the multi-strategy sector grows. AFI’s Multi-Strategy Power List found the 12 largest managers it tracks increased combined assets by 22% over the year to mid-2026, from $373.2bn to $456.4bn.

Obertelli said experienced PMs can benefit from spending part of their careers inside large platforms, despite ultimately wanting the investment freedom and entrepreneurial opportunity offered by an independent firm.

Smaller strategies attract early capital

Marex is also seeing a healthier launch pipeline in 2026, with fewer emerging managers remaining stuck at low asset levels for prolonged periods.

Obertelli said capacity-constrained and more niche strategies can be particularly well suited to starting independently because they can operate with lower AuM and attract smaller, more flexible investors.

The observations come as investor demand for multi-manager strategies remains strong. A Bank of America survey of 321 hedge fund allocators published this week found multi-manager and stock-picking funds among the strategies attracting the strongest demand.

Competition between the expanding platforms and their former employees could therefore intensify as both groups seek investment talent and capital in a growing hedge fund market.