Brevan Howard, one of the world’s largest hedge funds, has made a $200m allocation to Catalio Capital Management’s Public Equities Fund, a healthcare-focused strategy, according to a report by Reuters, citing people familiar with the matter.

The investment forms part of a growing trend among multi-manager hedge funds allocating capital to external managers. A recent Goldman Sachs report found that nearly three-quarters of multi-managers now invest in other hedge funds, up from just over half in 2022.

Catalio Capital Management, a $2.3bn New York-based firm backed by KKR, runs a diversified healthcare strategy spanning public and private markets, targeting companies across drugs, devices, diagnostics, and data. The Public Equities Fund, led by Ben Snedeker — a former DE Shaw portfolio manager — has returned 12% year-to-date and 49% since inception in 2023, net of fees, according to one source.

Under the arrangement, Brevan Howard will assume risk oversight through a separately managed account, while Catalio handles portfolio management and trading.

Founded by Alan Howard in 2002, Brevan Howard manages about $34bn and serves clients including sovereign wealth funds and pension plans. The firm has recently expanded its capital base following a $2bn minority investment from Abu Dhabi’s Lunate earlier this year.