(Bloomberg) -- Fortress Investment Group and Lighthouse Investment Partners agreed to merge their global multistrategy hedge funds and tap each other’s talent to capitalize on the explosive growth of such money pools.

The firms reached a preliminary agreement to co-manage the combined fund under the leadership of Lighthouse Chief Executive Officer Sean McGould and Jeff Runnfeldt, the chief investment officer of Fortress Multi-Manager Group, according to an internal Lighthouse memo seen by Bloomberg. 

Their new fund will replace the existing multimanager strategy at Fortress. The memo didn’t reveal financial details of the partnership, which is expected to be finalized in the first quarter.

McGould and a representative for Fortress declined to comment.

Hedge fund investors have increasingly looked to back multistrategy money pools where teams of traders invest across asset classes to produce steadier returns. The biggest of them, including Millennium Management and Citadel, have more investor demand than they can manage. 

Diverse Offering

“It has become clear that a growing segment of allocators is seeking an offering that is more diverse than our current hedge fund products,” Lighthouse said in the memo. 

Lighthouse, which oversees about $16 billion, has a roster of roughly 150 portfolio managers, half of whom are employees or invest exclusively for the firm. 

Fortress specializes in private credit, equity and real estate and manages about $50 billion. In late 2023, Fortress announced the acquisition of a multimanager fund from PineBridge Investments. It hired Runnfeldt, Balyasny Asset Management’s former global head of equities, as CIO.

Multistrategy hedge funds have boomed in recent years, with Goldman Sachs Group Inc. estimating that 53 such firms managed $366 billion at end of June, up from $134 billion in 2017. Multistrats have been battling to acquire and retain talent, spurring them to offer hefty sign-on bonuses and mandate lengthy non-competes.

While deals between hedge funds have historically been rare, they’re becoming more frequent as the industry’s biggest players look for quick ways to acquire talent to manage their billions.

In 2023, billionaire investor Dmitry Balyasny said hedge funds would need to acquire external teams of traders in order to have enough experienced employees to push into new areas. While developing talent internally is critical, he said, it’s not enough for firms looking to grow in a meaningful way.

©2025 Bloomberg L.P.