What began as a natural evolution of Tidan Capital’s expanding investment platform has quickly become the asset manager’s flagship offering. As institutional investors increasingly seek diversified sources of alpha rather than reliance on a single investment style, Confluence has emerged as Tidan’s answer: a multi-strategy hedge fund currently combining four distinct strategies spanning fundamental investing, volatility arbitrage, and systematic trading within a single portfolio.
“Confluence was never conceived as a product exercise. It emerged naturally from how Tidan evolved as a firm,” says Michael Falken, the CIO and co-founder of Tidan Capital. Originally built around a single strategy, the Tidan Fund, the asset manager gradually expanded by adding investment teams with complementary skill sets. As new teams joined the platform, “each with a very different way of generating returns,” according to Falken. “we could see from the historical track records that the interaction between the strategies had the potential to create something particularly compelling at the portfolio level.”
“Confluence was never conceived as a product exercise. It emerged naturally from how Tidan evolved as a firm.”
Michael Falken, the CIO and co-founder of Tidan Capital.
“What attracted us was not simply the low correlations,” explains Serge Houles, the CEO of Tidan Capital. “More importantly, the strategies exhibited complementary behaviour.” The four strategies derive returns from distinct market inefficiencies, respond differently to changing market conditions, and tend to contribute at different stages of the cycle.
A large U.S. allocator reached a similar conclusion and became increasingly interested in the combined portfolio rather than the individual strategies. When the NOVA and Asterion teams joined in early 2024, Tidan Capital launched a multi-strategy SMA that combined the strategies from day one. The launch reflects how Tidan operates as an organization. “Rather than starting with a product concept and looking for investors, we want to identify a genuine portfolio need and then build a solution around it,” notes Houles.
While the strategy remains relatively young, the track record of the SMA provides a useful indication of the benefits of combining the strategies. The multi-strategy SMA has generated a gross Sharpe ratio of approximately 2.1 since inception, with realized volatility of around 6 percent and a maximum drawdown of roughly 4 percent. More notably, these results were achieved with no meaningful beta exposure to the S&P 500.
The product has also exhibited the characteristics the team sought during periods of market stress. During episodes such as the April 2025 market dislocations and the volatility surrounding the Iran conflict in March 2026, the portfolio remained resilient while still participating meaningfully in subsequent market recoveries. “Achieving both downside resilience and upside participation is ultimately what we are trying to accomplish.”
Building a Portfolio Around Complementary Alpha
The foundation of Confluence is a simple premise: diversification is most effective when strategies are driven by different underlying market inefficiencies rather than different expressions of the same risk factor. “At a high level, Confluence combines three distinct alpha engines: fundamental investing across capital structures and companies, volatility arbitrage, and systematic trading,” continues Falken.
The Tidan and Themis strategies are rooted in fundamental research, seeking situations where market prices diverge from underlying economic reality. NOVA, by contrast, focuses on volatility dislocations and relative-value opportunities within options markets, while Asterion employs a systematic, multi-strategy approach designed to exploit behavioural and statistical patterns across global futures markets.
“At a high level, Confluence combines three distinct alpha engines: fundamental investing across capital structures and companies, volatility arbitrage, and systematic trading.”
Michael Falken, the CIO and co-founder of Tidan Capital.
“Tidan is the portfolio’s core fundamental alpha engine,” emphasizes Falken. The strategy seeks opportunities arising from corporate events, restructurings, and mispricings across a company’s capital structure. Themis shares the same research DNA but applies it within an equity market-neutral framework, expressing similar insights through long and short equity positions.
“NOVA operates in a completely different part of the market,” continues Falken. The strategy focuses on volatility dislocations and relative-value opportunities within options markets. “It brings a return stream that is largely independent of traditional equity and credit investing and tends to exhibit attractive diversification characteristics given its long convexity profile,” he adds.
Asterion, meanwhile, represents the systematic component of the portfolio. The relatively short-term, behaviourally driven strategy is designed to capture recurring statistical patterns across liquid futures markets. “Its return profile is distinct from both the fundamental and volatility strategies and adds another independent source of alpha,” says Falken.
Together, the strategies provide exposure to a broad range of return drivers. “That is ultimately the role each one plays within Confluence: not simply to add another strategy, but to add another source of alpha that improves the resilience of the overall portfolio,” reiterates Falken.
A Platform Designed to Evolve
From the outset, Tidan did not intend to build a fixed four-strategy portfolio. Instead, Confluence was designed as an evolving platform capable of incorporating new alpha engines. “The objective is not to maximise the number of strategies or portfolio managers,” notes Houles. “Every additional strategy increases complexity and therefore needs to contribute something genuinely new to the portfolio.”
Vanir, a volatility relative-value strategy currently being onboarded by Tidan Capital, illustrates this approach. Although it sits within the broader volatility and options team, it seeks to exploit a different opportunity set than NOVA. “It focuses on dispersion, correlation and volatility parameter dislocations driven by structural supply-and-demand imbalances in derivatives markets,” explains Houles. The question the Tidan team faces is not whether Vanir can generate attractive standalone returns, but whether it improves the overall portfolio when combined with the existing strategies.
“The objective is not to maximise the number of strategies or portfolio managers. Every additional strategy increases complexity and therefore needs to contribute something genuinely new to the portfolio.”
Serge Houles, the CEO of Tidan Capital.
Ultimately, that is the lens through which Tidan Capital evaluates any potential addition to the platform. “Confluence should be viewed as a living platform rather than a static collection of strategies,” says Houles. While the composition of the portfolio may evolve over time, the underlying philosophy remains unchanged: “combining a small number of highly differentiated alpha engines rather than accumulating strategies for the sake of diversification.”
Portfolio weights within Confluence are adjusted dynamically, though not based on discretionary market views. “We are not making top-down macro calls or attempting to predict which strategy will outperform over the next quarter,” says Falken. Instead, the allocation framework continuously assesses the strategies from both return and risk perspectives, seeking to optimize the portfolio as a whole.
Central to the process is a great focus on downside risk. “While return expectations remain important, we focus heavily on downside volatility and drawdown behaviour,” argues Falken. “Importantly, the objective is not to maximise the allocation to whichever strategy has performed best recently,” he adds. “The goal is to construct a portfolio where the interaction between the strategies produces the most attractive overall risk-adjusted outcome.”
What Differentiates Confluence
While Confluence may resemble other multi-strategy offerings on the surface, Houles argues that the similarities are largely superficial. The portfolio was not assembled by bringing together a collection of managers under a common umbrella, but rather evolved from combining established investment teams whose return streams were already proven to complement one another. “Each underlying strategy has its own identity, investment process and track record, but they also share a common culture, infrastructure and ownership structure,” says Houles.
“Each underlying strategy has its own identity, investment process and track record, but they also share a common culture, infrastructure and ownership structure.”
Serge Houles, the CEO of Tidan Capital.
The lead portfolio managers are shareholders in the firm, creating a strong alignment between investors, investment teams, and the business itself. At the same time, the teams collaborate closely, regularly exchanging ideas, research, and market observations. “That creates a degree of cross-fertilisation that is often difficult to achieve in larger multi-manager platforms,” notes Houles.
The structure also offers several practical advantages for investors. “Unlike many multi-strategy offerings, performance fees are fully netted across strategies and the portfolio maintains a high degree of liquidity without gates or lock-up provisions,” explains Houles. Investors can also access the underlying strategies individually rather than delegate portfolio construction to Tidan Capital.
“What resonates with investors is not necessarily the label “multi-strategy,” but the diversification of return drivers.”
Serge Houles, the CEO of Tidan Capital.
Houles believes that this focus on diversification of return drivers, rather than diversification by manager count or asset class, is what increasingly resonates with investors. “What resonates with investors is not necessarily the label “multi-strategy,” but the diversification of return drivers.” As markets become more complex and predicting the next winning strategy or asset class becomes increasingly difficult, investors place greater value on portfolios built around multiple independent sources of return. “A portfolio built around several genuinely distinct sources of alpha can be a more robust way of navigating that uncertainty.”
