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Matthias Knab, Opalesque for New Managers: Chicago-based Kai Asset Management, an affiliate of registered investment advisor Kai Wealth, has hired former QVR Advisors portfolio managers Noel Smith and Scott Maidel to run its institutional business and will launch the first two funds under its new KaiConvex brand on December 1, 2026.
The expansion reflects the view of founder Cem Karsan, a former options market maker, that investors face a period of potentially severe market risk over the next two years. As of November 1, Kai moved client portfolios into a heavily hedged posture.
Two funds, two approaches to convexity
The first fund, Hedged Equity, targets strong risk-adjusted returns by balancing upside capture with downside mitigation. The strategy draws on option prices, which reflect market expectations for the distribution of returns. Kai argues that the boom in option selling and income funds has created a structural pricing opportunity for hedged beta and convexity.
The second, Carry Neutral Tail Hedging, is designed to protect against a range of equity market declines while keeping the cost of protection in check, seeking maximum cash-efficient convexity.
Smith said most tail hedges only pay off in a crash, leaving investors to spend years paying for protection while they wait. Because markets do not fall in just one way, he said, the team built its portfolios to guard against most of the ways they can.
Kai also points out that most investors buy downside protection from banks in the form of structured notes, while the firm builds similar protection from exchange-traded options at a fraction of the cost.
From family offices to institutions
With the new business, Kai is extending to venture funds and institutional investors the hedging solutions it previously provided to family offices. These include custom options overlays for large concentrated holdings, as well as loans against those holdings structured with box spreads.
Maidel said that while many investors talk about hedging their equity portfolios, few follow through - but with markets at all-time highs, more are now ready to act.
Karsan said most investors do not think about risk until they are hit by it, and that he expects a very volatile period after the US midterm elections. In his view, the tools to manage that risk have existed for years, but the infrastructure to deliver them in a liquid, accessible portfolio has only recently emerged.
The firm expects the next two years to bring more risk, not less, arguing that the traditional stock-and-bond portfolio no longer works as it used to and that geopolitics adds to the danger.
The team
Noel Smith joins as co-chief investment officer and head of portfolio management at Kai Asset Management. He was previously a senior portfolio manager at volatility specialist QVR and has traded volatility for more than 30 years. In 1996 he was a founding member of Third Millennium Trading, which became one of the largest US equity options market makers, and he was the seed investor behind GETCO, which at its peak handled about a fifth of US stock trading.
Scott Maidel becomes head of institutional solutions and portfolio manager for KaiConvex HF Solutions. As a partner at QVR and head of its hedge fund business, he was responsible for business development and ran custom tail-hedging overlays and the firm's Hedged Equity strategy. During his tenure, QVR grew from a USD100m single-client separately managed account to more than USD1.5bn in assets under management.
Cem Karsan, Kai's founder and co-chief investment officer, made his name at Precision Capital, the options market maker he founded and sold in 2010, which at its peak handled about 13% of daily S&P 500 options volume. He hosts the "U Got Options" podcast from the Cboe trading floor in Chicago and is a frequent CNBC contributor on Federal Reserve meetings and volatility.
About Kai
Kai Wealth LLC is a Chicago-based registered investment advisor serving high-net-worth families, family offices and institutions, and also runs a turnkey asset management platform used by other advisory firms. Founded by Cem Karsan, it became an RIA on January 1, 2025, and manages about USD500m.
Kai Asset Management develops quantitatively driven, actively risk-managed strategies across hedge funds, overlays, cash management and alternatives for institutional investors under the KaiConvex HF Solutions brand. It is a trade name of Kai Volatility Advisors LLC, which is registered with the CFTC as a commodity trading advisor and is a member of the National Futures Association.
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