Wall Street has always been full of drama, but the 'Sky-high Fundraising' led by investment guru Bobby Jain has really made the global financial community sit up and take notice.

Recently, Jain Global, a hedge fund founded by Bobby Jain, former co-CIO of Millennium, one of the world's top hedge funds, has become the largest hedge fund launch case since 2018 with an astonishing subscription of $5.3 billion.

It is said that the fund was launched in early July and is currently engaged in commodity derivatives trading, with plans to enter physical trading afterwards.

In the current turbulent global financial market, hedge funds are generally not doing well, especially in the United States, where the first-half performance of the hedge fund industry lagged well behind the S&P 500 index, yet Jain Global has successfully raised such a huge amount of funds in such a difficult market environment, which begs the question: what exactly are investors interested in?

This inevitably leads one to ponder: what exactly are investors looking for?

An Indian conquering Wall Street?

Unlike Silicon Valley, where Indians dominate, Wall Street is still dominated by whites and Jain's Indian identity stands out here.

Jain grew up in Queens, New York, and his parents were both Indian immigrants. His mother was an accountant and his father an engineer, making them 'numbers people' in the eyes of outsiders.

It is obvious that Jain is also a numbers person. At the age of 53, Jain has nearly 30 years of experience in the financial industry.

However, he did not major in finance, but instead studied political science, which is quite irrelevant to finance.

In 1992, Jain graduated from Cornell University with a Bachelor's degree in Political Science and Government. During his time at school, he also ran an advertising agency.

Four years later, he officially entered the finance industry.

This may seem odd, particularly for a young man who didn't even know Goldman Sachs, but 'all the smart kids were going into finance,' said the now successful Jain in an interview with the media, 'and that's where I belonged.'

Jain's career began at Chicago trading firm O'Connor and Associates, where he demonstrated remarkable trading talent at a time when trading was done by shouting.

In 1996, Jain successfully switched to Credit Suisse.

At this top global investment bank, Jain played it safe and took a full 20 years to work his way up from a regular trader to head of Credit Suisse's global assets.

This experience not only gave him a wealth of financial knowledge and experience, but more importantly, it also introduced him to countless Wall Street bigwigs, paving the way for his future entrepreneurship.

In 2016, Jain's career took a major turn when he joined Millennium, one of the world's top hedge funds, as co-CIO.

During his seven years at Millennium, Jain improved the company's core risk control system, closely monitoring more than 320 internal investment teams, forcing managers to cut underperforming positions and allocating more funds to teams with good performance.

During his tenure, assets under Millennium's management doubled from $30 billion to $60 billion. In 2020, a year when the pandemic hit, Millennium achieved a return of 25.8%, far higher than the average return of 11.6% for the global hedge fund industry and the 16% rise in the S&P 500 index.

Jain was once regarded by many industry insiders as the successor of Millennium founder and legendary investment mogul Izzy Englander, but surprisingly, he resigned in 2022. Product structure, 10-30 billion yuan products operating income of 401/1288/60 million yuan respectively.

Izzy Englander

Some speculate that unexpected incidents in the succession plan led Jain to realize that his career at Millennium had come to an end, and he began preparing his own fund company, Jain Global.

Did Jain Global raise 5.3 billion in capital against the current, by offering low stock prices like PDD?

Jain Global started raising funds in September last year.

Jain's appetite is large. The initial goal is to raise 8-10 billion US dollars for Jain Global. If the scale is reached, Jain Global will set a record for the highest hedge fund launch in history.

Although Jain has a top-notch reputation and network in the industry, the road to fundraising for Jain Global has not been smooth sailing.

The financial market in 2023 is very unstable. High inflation, soaring interest rates, stock market volatility, and various "gray rhinos" and "black swans" converge.

In this situation, investors have become more cautious, and hedge funds are no longer the "sweet cake" in their eyes. The returns of Millennium Fund also fell to around 10% last year.

Faced with unfavorable situations, Jain had to cut his target in half, changing to raise 5-6 billion US dollars.

What's more troublesome is that due to the non-competition agreement with his former employer, Jain Global cannot contact Millennium's clients after subscription. This means that a large part of the customer resources he has accumulated in this fund giant in the past cannot be used.

In such a challenging environment, Jain's personal brand and past performance are not enough to convince investors that Jain Global is a wiser choice than the old fund giants.

In response, Jain has offered generous incentives - a significant and permanent reduction in fund commission rates.

Traditional hedge funds usually adopt a "80-20 split" model, with the fund receiving 20% of the commission, and the remaining 80% going to the client.

Jain Global has significantly reduced the commission rate, promising to permanently reduce the commission rate to 10% for large clients subscribing more than 0.25 billion dollars. For small clients with less than 0.1 billion dollars, the commission is 15%, while medium clients between the two are charged a commission of 13%.

It is also more flexible in redemption, with a lock-in period of only two years, much shorter than five years of competitors such as Millennium.

With a series of preferential policies and Jain's "charm offensive", the year-long "fundraising marathon" finally entered the sprint stage, and Jain Global obtained about 1 billion dollars from some key investors, including sovereign wealth funds in the Middle East.

The participation of Middle Eastern tycoons not only supported Jain Global's "massive fundraising", but also injected a stimulant for other investors.

In the end, Jain Global successfully raised 5.3 billion US dollars, failing to achieve the initial fundraising goal of 8-10 billion US dollars, but still setting a record for the largest-scale hedge fund first-time fundraising since 2018.

Multi-strategy hedge funds - the hottest racecourse on Wall Street

Given the close relationship between Jain and Englander, Jain Global naturally bears many shades of Millennium, such as multi-strategy hedging.

In recent years, multi-strategy hedging has become one of the hottest fund tracks on Wall Street.

Unlike traditional funds, multi-strategy hedging funds are not limited to a single investment method, but instead employ multiple strategies to achieve stable returns in different market environments.

Simply put, multi-strategy hedging funds are willing to include stocks, bonds, commodities, forex, derivatives and anything else that can generate profits in their investment portfolios in order to diversify their risks and achieve significant returns.

The advantages of this approach are obvious: risk diversification and significant returns, making them popular with risk-averse investors.

Top global hedge funds like Citadel and Millennium both use multi-strategy hedging risks and have seen substantial profits in recent years.

According to Goldman Sachs data, assets managed by multi-strategy funds grew an astonishing 150% between 2018 and 2022, far outpacing the 13% growth rate of the entire hedge fund industry over the same period.

In addition, Barclays previously reported that over the past five years, the average annualized ROI for 42 multi-strategy hedge funds was 8.1%, which is 2 percentage points higher than other companies in the industry.

Jain Global also adopts a multi-strategy hedging fund model and implements seven strategies all at once: fundamental equities, commodities, credit strategies, quantitative trading, arbitrage strategies, macro strategies, and a dedicated AP strategic.

Their main strategy is a "full banquet of Chinese and Western dishes".

In addition, Jain Global is building a single platform to launch all of its strategies.

In Jain's own words, "this is a rare feat in the industry."

Jain wrote in an investor document, "We are building a single, cross-asset, modern operational platform. Although more intensive upon launch, it avoids the inherent challenges, complexity and cost of continuous construction."

A modern multi-strategy hedging fund typically places high importance on technology and risk management. Therefore, Jain is likely to draw on his experience accumulated at Millennium.

Millennium is well-known for its stringent risk control and monitors the performance of each investment team closely, quickly cutting losing positions and allocating more funds to outstanding teams.

Recruiting gambler and buying horses, investment managers mostly come from giant investment banks on Wall Street.

Of all the strategies, fundamental equities may be one of the most important strategies for Jain Global.

To this end, Jain has hired Townie Wells as the Chief Investment Officer of Fundamental Equities in the Americas. Wells previously served as a portfolio manager for Ashler Capital at Citadel's stock department for two years.

Commodities strategy is also a major event, reportedly receiving a capital allocation in the double digits from Jain Global.

Behind this allocation, Jain may have seen the increasingly violent volatility of commodities in recent years, especially the rising prices of gold and cocoa.

In terms of corporate bond strategy, Jain Global has hired Jeff Bersh from hedge fund giant Venor Capital and former Man Group quantitative credit strategy director Richard Martin as experienced corporate bond traders.

As for more complex quantitative trading, Jain Global has hired former Morgan Stanley managing director Peter Bolland as chief investment officer of quantitative strategies.

In addition, macro strategy and Asia-Pacific strategy will be led by former Bank of America fixed income trading co-head Gerhard Seebacher and former Morgan Stanley managing director Sam Kellie-Smith respectively.

As of launch, Jain Global has at least 150 employees, including more than 40 portfolio managers.

These talents all come from top institutions in the industry, including Citadel, Balyasny Asset Management, Brevan Howard and Wall Street's large investment banks.

Jain also promises to give outstanding employees the opportunity to start their own hedge funds in the future. If these employees start their own hedge funds, Jain Global will invest in them.

How to meet the high expectations brought about by high-profile fundraising?

Jain Global's ambition is evident, as it aims not only to become a successful multi-strategy hedge fund, but also to challenge the positions of industry giants such as Citadel and Millennium.

However, fundraising is only the first step. The "newborn" Jain Global still faces many challenges.

In today's hedge fund industry, a fierce talent war is unfolding, with signing bonuses and performance fees reaching historic highs.

How to provide competitive compensation to these top talents without overextending the future will be the first issue Jain needs to carefully consider.

In the current environment of high interest rates, high inflation, and frequent geopolitical conflicts, hedge funds face enormous performance pressure. Jain Global needs to prove that it can sustainably create excellent returns in various market environments. If there is a slight mistake, it may face redemption pressure.

At the same time, managing multiple strategies and a large number of portfolio managers brings enormous operational challenges. Jain needs to establish a strong infrastructure and management system.

How to find a balance between diversification and specialization, and how to coordinate resource allocation among different strategies are the problems Jain needs to face.

High-profile fundraising inevitably brings high expectations. Jain Global needs to demonstrate its value proposition and achieve excellent results in the short term to maintain investor confidence.

In addition, Citadel and Millennium, which manage assets of 60 billion US dollars respectively, have thousands of employees. They invest tens of millions of dollars each year in technology and data analysis.

Jain Global still has a long way to go if it wants to catch up.

Regardless of the outcome, Jain Global's "sky-high fundraising" has become one of the hottest topics on Wall Street in 2024.

In the future, everyone will be watching Jain, this ambitious "disruptor," to see if he can carve out a bloody path on Wall Street and become the next Wall Street legend.