May 11, 2026 · 57m · capital-allocators
Will England, Derek Drummond, and Tony Caruso – Disintermediating Pod Shops (EP.501)
Derek Drummond · 18m spoken Ted Seides · 11m spoken Tony Caruso · 11m spoken Will England · 9m spoken
0:00 / 0:00
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of Capital Allocators, host Ted Seides interviews Will England of Walleye Capital, Derek Drummond of SWIB, and Tony Caruso of UTIMCO to discuss Dockside, an innovative managed account platform designed to disintermediate traditional multi-manager hedge funds through daily trade transparency, institutional financing efficiency, and lower fee structures.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 22.1% of the talking time here. How this is scored →
Ted as informed peer 3.3 Guest teaching 3.0 Guest disagreement 0.4 Ted pushing back 0.6
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 21:42 Rejection of the Historical SMA Adverse Selection Stigma
Derek Drummond directly reframes the conventional view of managed accounts, contrasting the historical last-resort stigma with today's positive selection of profitable institutional PM spinouts.
Hardest push from Ted ▶ 23:00 Ted Challenges the Fast Cutoff vs. Ten-Year Partnership DichotomyTed actively challenges the guests by juxtaposing their claim of swiftly cutting off underperforming left tails with Tony's statement about maintaining decade-long manager relationships.
Biggest teaching moment ▶ 27:54 Three Days of Granular Transparency vs. Three Years of Fund LettersTony Caruso and Derek Drummond educate the host on how intra-month volatility and daily trade snapshots reveal manager decision-making during drawdowns far faster than years of monthly investor letters.
Ted holds their own ▶ 25:08 Ted Drills into Due Diligence Rigor Under Fast Onboarding TimelinesTed demonstrates sharp industry familiarity by pushing Tony on how an allocator can maintain long-term underwriting confidence while executing expedited diligence to compete for talent.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Host Monologue: Travel Season Reflections and Driving Pet Peeves | 0 | 0 | 0 | 0 | Host solo monologue discussing travel season, conferences, and personal pet peeves regarding regional driving speed limits. No guest interaction takes place. | |
| Sponsor Messages: AlphaSense, Intapp DealCloud, and Admired Leadership | 0 | 0 | 0 | 0 | Mid-roll sponsor reads for AlphaSense, Intapp DealCloud, and Admired Leadership prior to the start of the interview. | |
| Institutional Backgrounds and the Role of the Dockside Platform | 3 | 2 | 0 | 0 | Ted opens the dialogue by prompting Derek Drummond, Tony Caruso, and Will England to describe their respective institutional seats and how the Dockside platform connects their operations. | |
| Genesis and Core Economic Advantages of the Platform Model | 3 | 3 | 0 | 0 | The guests detail how Dockside was conceived over informal discussions and explain the core economic advantages, such as financing at Fed funds plus 20 basis points. | |
| Platform Architecture, Technology Infrastructure, and Risk Controls | 4 | 3 | 0 | 0 | Ted asks how operational responsibilities were divided. Derek and Will explain the technology infrastructure, rapid onboarding, and strict information barriers between Dockside and Walleye. | |
| Sourcing Portfolio Managers and Overcoming Managed Account Stigma | 4 | 4 | 1 | 0 | Guests detail how sourcing PMs has shifted away from adverse selection to positive selection as top entrepreneurial talent leaves established pod shops to launch standalone SMAs. | |
| Tail-Risk Management, Hedging Tools, and Streamlined Diligence | 5 | 4 | 1 | 4 | Ted probes the apparent tension between fast risk cutoff guidelines and claiming a ten-year average manager relationship duration, prompting Tony and Derek to clarify diligence and dynamic hedging. | |
| Daily Transparency Insights and Multi-Manager Portfolio Construction | 4 | 5 | 0 | 0 | Derek and Tony explain what trade-level daily transparency reveals about manager behavior in drawdowns, contrasting three days on Dockside with three years in a traditional commingled fund. | |
| Mid-Roll Sponsor: Ridgeline Investment Management Technology | 4 | 4 | 0 | 0 | Following a brief mid-roll ad for Ridgeline, the discussion explores dynamic factor hedging and transparent, unemotional exit protocols when managers cross defined risk boundaries. | |
| Comparing Dockside to Multi-Strat Pods and Calculating Fee Savings | 5 | 4 | 1 | 2 | Ted questions the comparative cost structure between Dockside and full pass-through multi-manager funds, prompting Derek and Tony to quantify tens of millions of dollars in explicit interest and fee savings. | |
| Operational Dynamics, Prime Brokerage Flows, and Strategic Expansion | 4 | 4 | 1 | 1 | The guests candidly discuss learning curves with prime brokers over trading flows, vertical integration opportunities like stock lending, and closing reflections on entrepreneurship. |
Statements from this episode (21)
SWIB runs roughly half its assets internally and half externally
“Here at the state of Wisconsin, we run about half of our assets internally and then half of our assets externally.”
UTIMCO manages $88 billion for 22 institutions
“It's an eighty-eight billion dollar endowment. Manages money for 22 academic and health institutions.”
UTIMCO's zero-beta hedge fund portfolio is roughly $11 billion
“I manage the zero beta hedge fund portfolio. It's roughly eleven billion in size.”
UTIMCO has roughly $7 billion allocated through the Dockside platform
“It's currently around seven billion of GMV.”
Walleye Capital operates a $12 billion multi-strategy pass-through fund
“Most people know that context is running our multi-strat business, which is a twelve billion dollar full pass through.”
Hedge fund allocation without extreme diversification is cash inefficient
“When we're investing in hedge funds, if you don't have extreme diversification, you're doing things in a cash inefficient way.”
Multi-strategy SMAs let institutional allocators borrow at Fed funds plus 20bps
“The real unlock when you think of an overall plan like UTIMCO or SWIB, you're implicitly borrowing money at Fed funds plus like 20 basis points.”
The historical stigma of adverse selection in managed accounts has faded
“What's happening now is given how easy it is for both the manager and the source of capital to have a managed account relationship, the availability of talent that is participating in running managed accounts, this whole notion of adverse selection has been di…”
UTIMCO's average hedge fund relationship lasts more than ten years
“Our average hedge fund relationship is 10 plus years.”
UTIMCO targets 20 to 30 portfolio managers for its managed accounts
“For the manage account platform, we're not looking for 350 PMs. We're looking for 20 to 30. We're going to do a lot of work on them.”
Managed accounts cut SWIB's diligence timeline from months to weeks
“Our typical write-up is about 40 pages plus and probably takes us Three months to get a deal done in our main hedge fund portfolio. Here, if we find somebody we really like, we could probably get three, four weeks, a 10 to 15 page write-up, and it's much more …”
Three days of managed account transparency beats three years in a fund
“Derek and I have joked before, you learn more about a manager on three days on Dockside than three years if you invested in a fund. You understand what they do, what their portfolio looks like, how it evolves.”
SWIB uses a 17-manager managed account platform as a talent incubator
“We came up with this heuristic, so we have 17 PMs, and we're managing like it's a portfolio, but if we get confidence in that manager enough, they can graduate and become their own line item in our hedge fund portfolio. As we get more and more confidence, we c…”
Combining low-correlation 0.9 Sharpe managers yields a 2.5 portfolio Sharpe
“Across a number of lowish sharps, you get a good net final sharp. The overall portfolio sharp can grow from any single PM is .nine, but the overall portfolio is two and a half plus.”
Almost all portfolio managers prefer identical terms over custom institutional mandates
“And in 99.9% of the cases, the PM doesn't want to do anything special. They want everyone to be on the same terms and the same strategy.”
There are only about a dozen scaled multi-strategy hedge funds globally
“There's probably a dozen scale of multi-strats in the world, so there are relatively small numbers we're talking about.”
Capacity constraints prevent UTIMCO from expanding allocations to major multi-managers
“We can't grow much more with these multi-managers, A, because they're closed, B, because their liquidity terms are a three-year or five-year slow pay.”
Pensions mistakenly incentivized hedge funds to lower volatility and gather assets
“The average hedge fund out there, down the fairway hedge fund, us dumb pensions did the wrong thing by incentivizing them to run lower vol and take in more assets and collect that management fee.”
SWIB's hedge fund portfolio uses $10 billion in internal financing
“I'm the biggest consumer of the fleet rate at SWIB right now, and I borrow a 10, eleven billion dollars.”
Multi-managers are raising day-one external SMA tickets to $400 million
“This space is getting more competitive. Now, the big platforms are allocating external managers. Getting access to that next talent coming out the door is getting a little bit harder. Getting a separate account for a hundred million dollars on day one, they're…”
UTIMCO prefers probabilistic 'fox' portfolio managers over overconfident storytellers
“Overconfidence. People who think they can predict the unpredictable. If you've read any books by Nate Silver or Philip Teplot, they call it the hedgehogs. The great storytellers, not the ones who actually assign probabilities and understand that there's uncert…”