A data-driven approach to hedge fund investing

Seeded by the Eccles family, the Covariance Fund uses a quantitative framework that incorporates the lessons of behavioral finance. We aim to deliver the highest and most consistent total returns possible—regardless of economic and market conditions—while minimizing the risk of loss.  
Investment Strategy

A portfolio of uncorrelated, systematic return drivers

Investors are human. And as markets shift, we tend to make emotional and impulsive decisions that sometimes lead to suboptimal investment performance. To counter this, we apply several uncorrelated quantitative models to portfolio management decisions, systematically deploying capital across long and short positions.

The Covariance Fund's market-neutral strategy seeks to generate positive returns in every market environment, minimize downside risk, and add diversification in multi-asset portfolios by maintaining the following attributes:

Low correlation to markets

Low correlation to markets

Most investors have significant exposure to equity, credit and duration risk factors. We’ve designed the Covariance Fund to be a pure source of alpha that’s uncorrelated with major beta drivers in an effort to help our investors achieve better overall returns with lower volatility.

Equity-like returns

Equity-like returns

The Covariance Fund is intended to complement our investors’ portfolio allocations. Our strategy is calibrated to move enough that it delivers meaningful diversification benefits but not so much that it introduces unwanted volatility.

Minimal drawdowns

Minimal drawdowns

The Covariance Fund maintains a large number of uncorrelated and positively-convex positions with upside potential that exceeds their perceived risk of loss. This feature aims to keep the depth and duration of drawdowns to a minimum even as the strategy targets outsized returns.

First Security Building

Low correlation to markets

Most investors have significant exposure to equity, credit and duration risk factors. We’ve designed the Covariance Fund to be a pure source of alpha that’s uncorrelated with major beta drivers in an effort to help our investors achieve better overall returns with lower volatility.

First Security Building

Equity-like returns

The Covariance Fund is intended to complement our investors’ portfolio allocations. Our strategy is calibrated to move enough that it delivers meaningful diversification benefits but not so much that it introduces unwanted volatility.

First Security Building

Minimal drawdowns

The Covariance Fund maintains a large number of uncorrelated and positively-convex positions with upside potential that exceeds their perceived risk of loss. This feature aims to keep the depth and duration of drawdowns to a minimum even as the strategy targets outsized returns.

First Security Building
Our Team

Recognized Expertise

Brian Smedley is a Managing Director and Head of Cynosure Strategies. He manages the Covariance Fund as the firm’s Chief Investment Officer. He previously held senior positions at Guggenheim Investments, Bank of America and the Federal Reserve Bank of New York.

Randal Quarles is the Chairman and Co-Founder of The Cynosure Group. Prior to forming Cynosure in 2014, he spent many years as a partner at the Carlyle Group and held senior financial policy positions in four different presidential administrations. He served most recently as Vice Chair for Supervision of the Federal Reserve Board of Governors. 

Meet the Team
Cynosure
Salt Lake City
(801) 521-3100
111 S. Main Street, Suite 2350
Salt Lake City, UT 84111
New York City
(801) 521-3100
152 W 57th St, Suite 16N
New York, NY 10019