Millennium is withdrawing more than $1.5bn in leveraged capital from two external hedge funds following investment losses, highlighting the risks facing smaller managers reliant on funding from major platforms, according to a report by Bloomberg.

The $95bn-plus hedge fund, founded by Izzy Englander, has redeemed more than $1bn in leveraged capital from event-driven manager Troluce Capital Advisors and a further $500m from Axebrook Capital, which was established by Jack Land following a spinout from York Capital Management approximately five years ago.

The withdrawals were reportedly prompted by losses at both firms, although Troluce and Axebrook are expected to continue operating. Troluce has also recently expanded its trading activities beyond its flagship hedge fund strategy.

Millennium has increasingly allocated capital to external managers as part of its broader investment model, with dozens of its more than 370 investment teams operating outside the firm. Such arrangements provide smaller hedge funds with access to substantial capital and infrastructure, but also expose them to stringent risk limits and the possibility of rapid withdrawals following underperformance.

The decision comes as multistrategy hedge funds face growing scrutiny over portfolio leverage, risk management and capital allocation across their investment teams. Millennium, which has remained relatively resilient amid recent market volatility, recorded an 8.1% gain for the year through September, with performance broadly flat during the month.