Taconic Capital Advisors is closing its $1.8bn multi-strategy Opportunity Fund in a sweeping overhaul that will see the $4.5bn manager refocus on North American credit and merger arbitrage, according to a report by Bloomberg citing a recent letter sent to investors.

The New York-based hedge fund, founded in 1999 by Frank Brosens and the late Ken Brody, has struggled with lacklustre performance in its flagship, which has not posted annual gains above 9% in more than a decade. By contrast, its credit and merger arbitrage teams, led by Jon Jachman and Margaret Jones, have delivered stronger results, with the credit team’s latest fund generating a 19.6% net IRR through August and the merger arbitrage strategy up 9% year-to-date.

As part of the shakeup, Taconic will launch a new evergreen Credit Opportunities fund, continue running its $360m merger arbitrage vehicle, and allow investors in the Opportunity Fund to switch into either or both strategies from 1 October. Executives will transfer $200m of their own capital into the new credit fund, which will also give investors access to employee-level terms, including a share of revenue.

The restructuring also includes leadership changes, with Brosens moving from co-CIO to chairman and Nate Kempner becoming sole CIO and CEO. Meanwhile, Taconic’s London-based European credit team will spin out as Dolomite Capital in January 2026, retaining the $1.1bn it currently manages and securing fresh seed funding for its private credit strategy.