Key Takeaways
- • 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.
- • Kai will launch its first two funds under the new KaiConvex brand on December 1, 2026: a Hedged Equity fund and a Carry Neutral Tail Hedging fund.
- • Kai moved client portfolios into a heavily hedged posture as of November 1, reflecting founder Cem Karsan's view of potentially severe market risk over the next two years.
- • Kai is extending hedging solutions previously offered to family offices, including custom options overlays and box-spread-structured loans against concentrated holdings, to venture funds and institutional investors.
Summary
According to 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. The firm will launch its first two funds under the 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.
The first fund, Hedged Equity, seeks strong risk-adjusted returns by balancing upside capture with downside mitigation, drawing on option prices that 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 protection costs in check, seeking maximum cash-efficient convexity. Smith said most tail hedges pay off only in a crash, so investors spend years paying for protection while they wait. Kai also contends that while most investors buy downside protection from banks via structured notes, the firm builds similar protection from exchange-traded options at a fraction of the cost.
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 and loans against those holdings structured with box spreads. Maidel said that while many investors talk about hedging equity portfolios, few follow through, but with markets at all-time highs, more are now ready to act. Karsan said he expects a very volatile period after the US midterm elections and that the firm expects the next two years to bring more risk, arguing the traditional stock-and-bond portfolio no longer works as it used to and that geopolitics adds to the danger.
Noel Smith joins as co-chief investment officer and head of portfolio management. He was previously a senior portfolio manager at volatility specialist QVR, has traded volatility for more than 30 years, and was a founding member of Third Millennium Trading in 1996. Scott Maidel becomes head of institutional solutions and portfolio manager for KaiConvex HF Solutions; as a QVR partner and head of its hedge fund business, he ran custom tail-hedging overlays and the Hedged Equity strategy, and QVR grew from a USD100m single-client account to more than USD1.5bn in AUM during his tenure. Karsan, Kai's founder and co-chief investment officer, previously founded and sold Precision Capital in 2010, an options market maker that at its peak handled about 13% of daily S&P 500 options volume. Kai Wealth, which became an RIA on January 1, 2025, manages about USD500m. Kai Asset Management is a trade name of Kai Volatility Advisors LLC, registered with the CFTC as a commodity trading advisor.
The first fund, Hedged Equity, seeks strong risk-adjusted returns by balancing upside capture with downside mitigation, drawing on option prices that 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 protection costs in check, seeking maximum cash-efficient convexity. Smith said most tail hedges pay off only in a crash, so investors spend years paying for protection while they wait. Kai also contends that while most investors buy downside protection from banks via structured notes, the firm builds similar protection from exchange-traded options at a fraction of the cost.
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 and loans against those holdings structured with box spreads. Maidel said that while many investors talk about hedging equity portfolios, few follow through, but with markets at all-time highs, more are now ready to act. Karsan said he expects a very volatile period after the US midterm elections and that the firm expects the next two years to bring more risk, arguing the traditional stock-and-bond portfolio no longer works as it used to and that geopolitics adds to the danger.
Noel Smith joins as co-chief investment officer and head of portfolio management. He was previously a senior portfolio manager at volatility specialist QVR, has traded volatility for more than 30 years, and was a founding member of Third Millennium Trading in 1996. Scott Maidel becomes head of institutional solutions and portfolio manager for KaiConvex HF Solutions; as a QVR partner and head of its hedge fund business, he ran custom tail-hedging overlays and the Hedged Equity strategy, and QVR grew from a USD100m single-client account to more than USD1.5bn in AUM during his tenure. Karsan, Kai's founder and co-chief investment officer, previously founded and sold Precision Capital in 2010, an options market maker that at its peak handled about 13% of daily S&P 500 options volume. Kai Wealth, which became an RIA on January 1, 2025, manages about USD500m. Kai Asset Management is a trade name of Kai Volatility Advisors LLC, registered with the CFTC as a commodity trading advisor.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.