The Single-Manager Approach in the UK: Strategies, Challenges, and Emerging Models

How Directional and Market-Neutral Strategies Diverge

Despite significant challenges, many single managers in the UK continue to deliver consistent and sustainable alpha. The most common style is a directional, deep-dive fundamental research approach, while others adopt market-neutral frameworks that cater to allocator demand for low-volatility and low-correlation profiles.

Fundamental investors typically target companies capable of long-term value creation, conducting rigorous research and often maintaining strong relationships with management teams. With an investment horizon of one to five years, they are prepared to ride out periods of market volatility while sustaining conviction in their chosen assets.

This long-term approach allows these firms to achieve consistent returns by actively managing their positions. They capitalise on opportunities to sell when prices are deemed overvalued and increase their stakes during price dips. This strategy provides an advantage over competitors with stricter risk limits, which may force them to exit positions prematurely when prices decline. As these more risk-sensitive funds are sometimes compelled to sell under pressure, their actions can cause sharp price drops, creating opportunities for long-term investors to acquire shares at a discount. Conversely, when animal spirits lead to inflated valuations for portfolio positions, these firms can trim their positions down ahead of an inevitable mean reversion.

One standout example is a $5bn long-biased London fund running a concentrated book of 12–15 longs and 15–20 shorts. Its deep fundamental research and strong management access have supported sustainable double-digit returns, including approximately 20% in 2023 and 14% in 2024. This concentrated long strategy enables the firm to actively pursue shorting opportunities, dedicating substantial resources to identifying and researching these ideas. This more fundamental market approach also means that this firm can concentrate on allocating its resources towards the utilisation of expert networks, management meetings, and deeper dive fundamental modelling. This time and resource allocation towards a more fundamental approach allows the firm to focus on a longer time horizon and to confidently ride out smaller spurts of volatility that risk-conscious firms might be beholden to.

As a result, the firm has consistently delivered significant shorting alpha, outperforming the broader market. Since its inception, this approach has achieved double-digit annualised returns, steadily growing the firm’s assets under management and solidifying its reputation as a competitive destination for top investment talent. The talent that tends to gravitate towards these funds recognises the difference in approach and how that difference impacts employee lifestyle. One of these employees outlined that, “when you invest Market Neutral Long Short, you often can’t sleep through the night with concern for how global markets might impact your positioning”, relative to the longer perspective and therefore less actively managed style that many single managers employ.

Despite strong performance profiles like this, directional funds still experience capital flight. To address allocator preferences, several have introduced diversification-focused strategies—such as European Generalist ex-Technology portfolios—to help reduce concentrated exposure to US mega-cap technology names.

Why Market-Neutral Launches Are Accelerating

At the same time, many new launches—often led by former multi-manager PMs—are adopting market-neutral or quasi-market-neutral structures. These firms usually begin with leaner resourcing, looser exposure limits, and a focus on niche or less efficient markets where founders have long-standing expertise.

Although market-neutral single managers are less common in the UK, some have found success. A notable UK case study is a market-neutral fund that spun out of a multi-manager a decade ago and has since grown beyond $1bn AUM. Initially operating with ±20% net exposure, it has refined its approach and now rarely exceeds ±10%. Its disciplined process, low turnover, and experienced founding team have generated approximately 8% annualised returns with minimal drawdowns. Its European, less tech-heavy focus has also made it an appealing diversifier for allocators.

Market-neutral strategies often use leverage, magnifying both gains and losses. While multi-manager platforms can absorb individual pod drawdowns across diversified teams, single managers must shoulder the full risk themselves, increasing the consequences of missteps.

The Hidden Costs Behind Research-Heavy Approaches

Many market-neutral and hybrid models face growing operational and research costs. Some Elliott Management-style spinoffs, for example, struggle to replicate the deep legal and expert-network-driven research model of their parent firm. Elliott is a firm which is renowned for having a deep dive research approach to the market, which often utilises a combination of legal research teams, expert networks, and activist management interventions. This approach, particularly the legal research team aspect, can see costs spiral quite quickly and has led to tremendous spending from some recent launches. One example would be a Sector Specialist spinout in London, which was rumoured to have spent the equivalent of 3% of their total AUM researching a single investment, which they didn’t end up investing in. Portfolio Managers who have spent over a decade at Elliott and similar funds often become rather comfortable with this approach, yet struggle to rein in their spending when starting up themselves.

Quantamental strategies face similar scaling pressures. A London-based firm launched in 2021 with a short-alpha quant overlay, grew rapidly to a peak of $2.5bn AUM. The overlay recommended ideas to the analyst team and was refined using feedback from fundamental validation. However, as the competitive landscape intensified, the firm struggled to maintain an edge, returning 3% in 2023 and –3% in 2024—despite strong results from peers. The firm subsequently lost over $1bn in AUM within a year, highlighting the challenge of competing with large, well-resourced quant platforms.

These case studies illustrate the operational strain smaller firms face when attempting to replicate research-heavy or infrastructure-intensive models without the benefit of scale.

What Multi-Managers Mean for the Single-Manager Model

A distinct variation in the single-manager space is the multi-manager-backed single. This model has gained traction as multi-managers accumulate more capital than they can deploy internally and seek to cultivate talent with a more independent focus. Different multi-managers take various approaches to this model. Some extend a platform structure, launching additional strategies with Chinese walls between teams but allowing shared infrastructure in exchange for adherence to risk parameters. For instance, Citadel has launched prominent platform funds like Ashler Capital and Surveyor Capital. These platforms provide not only a differentiated culture but also allow for funds to increase their management exposure and ability to request time with management across their different teams.

Others provide large seed commitments to new funds. Millennium’s support of groups such as Albar Capital, Kodai, and Throughline reflects this approach. Seeded funds often receive upwards of $500m in capital, alongside access to institutional risk frameworks and, in some cases, the ability to use pass-through cost models.

However, these arrangements include trade-offs: strict risk parameters, shorter time horizons, full portfolio transparency, and profit-sharing obligations (typically ~20% in perpetuity). These constraints reduce independence, prompting some PMs to forego platform capital despite the operational burden of launching alone.

Finally, some multi-managers act as allocators, investing in new funds purely from a capital-provision perspective. These funds act like a more traditional Fund of Fund model, with the main difference being a higher bar regarding risk tolerance and extent of due diligence. While these strategies are less common in the UK, their growing prevalence in the US could offer a glimpse into the future as multi-managers expand their presence in the UK market.

Conclusion

The UK single-manager landscape is evolving, shaped by allocator preferences, rising research costs, and the expanding influence of multi-manager platforms. Fundamental, directional managers continue to demonstrate strong and sustainable performance, while market-neutral and hybrid approaches appeal to allocators seeking stable, uncorrelated returns. Multi-manager–backed models have created new pathways for capital formation, albeit with meaningful constraints.

Across these varied approaches, the most successful single managers demonstrate the same core attributes: differentiated research, disciplined risk management, and long-term conviction.