If you’re getting into investing or trying to understand what hedge funds do, you might have come across Centiva Capital. It’s one of the newer names in the asset management world but has grown fast. I’ve spent time reviewing its structure, strategies, and what sets it apart, so here is a breakdown in simple terms—why it matters, how it operates, what you should watch out for, and whether it might be right for you.
1. Who is Centiva Capital?
Founding, Leadership, Location
Centiva Capital, LP is a hedge fund based in New York. It was founded in 2016 by Karim Abbadi and Edward McBride. The idea was to build a multi-strategy investment firm—one that doesn’t put all its eggs in one basket.
Size & Assets Under Management (AUM)
As of recent filings, Centiva Capital has approximately $19.5 billion in AUM. It employs nearly 280 to 300 people. The firm operates as a hedge fund, structured as a limited partnership (LP).
2. Investment Strategy
What “Multi-Strategy” Means
When we say multi-strategy, it means that Centiva Capital does not stick to one kind of investment. It mixes things: equities (stocks), fixed income (bonds), ETFs (Exchange Traded Funds), sometimes derivatives or options (puts, calls) as part of hedging or opportunistic trades. The goal is to smooth returns and limit risk. If one sector or market is down, other parts may hold up.
Risk Management & Philosophy
They focus on risk-adjusted returns. That means they aim for returns that are good relative to the risk taken—not just big upside, but keeping losses under control. They also try for low correlation with major markets. Low correlation means their performance doesn’t move exactly the same way the S&P 500 or other general market indices move. That helps during market stress.
3. Portfolio & Key Holdings
Top Holdings & Sector Mix
Centiva Capital holds a large number of positions. For instance, recent data shows they have over 1,400 holdings in their disclosed portfolio. Some of their top holdings include:
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ETFs like iShares Russell 2000 ETF (IWM), High Yield Corporate Bond ETF (HYG), National Muni Bond ETF (MUB).
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Individual large-cap names like NVIDIA Corporation (NVDA) among others.
Sector allocation is broad. Some of the sectors with significant exposure include technology, financials, industrials, consumer cyclical, healthcare.
Recent Position Changes & Notable Moves
They are active in adjusting their portfolio. For example, they hold both long and short positions (long means betting a stock or ETF goes up; short or put options means betting it goes down). This mix lets them hedge: profits in one area can help offset losses elsewhere when markets are volatile.
They also shift exposure among sectors. For instance, bond ETFs seem to play a big role in their portfolio.
4. Performance & Comparisons
Historical Performance
Exact numbers vary depending on which period you look at. But some reports say Centiva’s “top weighted holdings” delivered strong cumulative returns over recent years. For example, an estimate from one analysis suggested about 30% cumulative return over three years for their top 20 holdings. Meanwhile, the top 50 holdings did somewhat lower but still meaningful returns.
Comparisons to Benchmarks and Peers
Because of their strategy, Centiva tends to show lower correlation to major indices during some periods. That’s a plus for some investors worried about big drawdowns. When compared with purely equity-focused funds, Centiva’s diversified mix (bonds, equities, derivatives) generally leads to smoother ride. It may lag when equity markets are booming, but it tends to fare better when markets struggle.
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5. Regulatory, Financial & Operational Details
Regulatory Filings & Transparency
Centiva files required disclosures. For example, 13F filings show their holdings in publicly traded securities. Their AUM figures are also publicly reported.
Corporate Structure & Employees
They are a limited partnership, with no public company status. Their operations are private. Employee count is in the high hundreds. On Glassdoor, reviews mention a fast-growing environment and supportive peers, though some say legacy infrastructure needs upgrade.
Culture and Internal Environment
From what employees say, there’s enthusiasm, ambition. But like many growing hedge funds, there are growing pains: older systems, process improvements needed. If you were considering working there, that’s a positive in terms of challenge but also means adaptability is important.
6. Risks, Challenges & What to Consider Before Investing
If you’re thinking about investing (directly or indirectly) in something like Centiva, or if you’re comparing hedge funds, there are several factors to keep in mind:
Market Risk & Volatility
Even though Centiva uses hedging and diversification, it is still exposed to market cycles. If there is a sharp downturn in equity or bond markets, some parts of their portfolio will suffer. Derivative positions (puts, etc.) help, but they’re not perfect protection.
Correlation & Diversification Limits
Diversification helps, but sometimes almost everything falls together (e.g. systemic risk). In those times, even diversified hedge funds get dragged down. It’s also possible some of their holdings are more correlated than they appear (for example ETFs that become more volatile).
Fees, Liquidity & Transparency
Hedge funds often charge higher fees: management fee + performance fee. These can eat into returns. Also, liquidity (how quickly you can exit) may be limited for some investors. Some holdings may be less liquid. Transparency is good in their public filings, but private dealings or derivative positions are less visible.
Operational & Regulatory Risks
As with any large fund, things like compliance, regulatory changes, staff turnover, technical infrastructure could create risk. Employee reviews hint that infrastructure is a current weak spot.
7. Future Outlook
Macro Trends to Watch
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Interest rates: Rising rates affect bond holdings, especially longer-duration bonds, negatively. Since Centiva has exposure to bond ETFs, they will feel that effect.
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Inflation: If inflation stays high, that may hurt some fixed income returns, but may help commodities or sectors with pricing power.
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Market volatility: Hedge funds often benefit (or at least survive better) when markets are choppy, if they hedge well.
Opportunities
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Innovations & technology: Technology stocks or sectors may offer outsized returns if chosen well.
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Alternative investments & derivatives: Centiva already uses these, so creative strategies could pay off.
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Geographic or sector shifts: For example, emerging markets, green energy, or other thematic trends may offer alpha.
Challenges
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Competition: Many funds are using similar strategies; staying different matters.
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Costs: As size grows, getting the same returns becomes harder. Big positions may limit flexibility.
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Regulatory pressure: Hedge funds face increasing scrutiny (fees, conflicts of interest, transparency).
8. Conclusion
Centiva Capital is a relatively young but substantial hedge fund using a multi-strategy model. Its strengths are diversification, active management, risk awareness, and solid growth in assets under management. For investors comfortable with hedge fund risk, it offers a compelling mix of strategies and hedging to smooth returns. But it is not without drawbacks: fees, liquidity, market exposure, and the potential for hidden correlations or operational risk.
If you’re considering it, make sure you understand how much you pay, how much you can lose, how transparent the fund is, and whether your investment horizon aligns with their strategy.
Frequently Asked Questions (FAQ)
Q1. Is Centiva Capital open to retail investors?
A: Generally, hedge funds like Centiva are not open to everyday retail investors. They often require high minimum investments and only accept accredited investors or institutions. Always check their offering documents for eligibility and terms.
Q2. What are Centiva Capital’s biggest holdings?
A: Some top holdings include bond ETFs (like those for corporate bond funds, high yield, municipal bonds) and large stocks such as Nvidia. The exact mix changes over time due to trades, market movement, and strategy shifts.
Q3. How does Centiva generate returns when markets fall?
A: Through hedging (using put options or short positions), diversification into bonds and less volatile assets, and careful risk management. These help reduce losses during downturns.
Q4. Are there any red flags or concerns to watch?
A: Some concerns include high fees, reduced liquidity for some investments, transparency of non-public or derivative exposures, and the potential for infrastructure or operational weaknesses. Employee feedback suggests room for improvement in some internal systems.
Q5. What kind of investor is Centiva Capital best suited for?
A: Probably institutional investors or high net worth individuals who can tolerate longer locks, higher fees, and want exposure beyond basic stocks and bonds. If you want simple passive investments, this may be more complex than needed.
