The Miami-based hedge fund Universa Investments, founded by Mark Spitznagel, is considering establishing an office in Switzerland. Chief Operating Officer Brandon Yarckin confirmed the plans in a conversation with finews.com, pointing to Zug as the likely location. «The Swiss mindset around safety and capital preservation makes Switzerland a natural home for us,» he said.

According to the firm’s latest Form ADV filed with the Securities and Exchange Commission (SEC) in the U.S., Universa manages about 20 billion dollars in Regulatory Assets Under Management (RAUM). Since inception in 2007, Universa’s audited average annual return on total fund capital is over 100 percent.

Bernoulli, Spitznagel, Taleb

The firm is best known for its intellectual pedigree: founder Mark Spitznagel, a longtime options trader, is supported by Nassim Nicholas Taleb, the author of «The Black Swan,» who serves as Distinguished Scientist. Spitznagel himself has Swiss-German roots, and Universa jokingly refers to the mathematician Daniel Bernoulli (1700-1782) as its «house saint» — reflecting the firm’s grounding in the geometry of risk and the compounding of wealth.

At the heart of Universa’s philosophy lies a deceptively simple proposition: protect against catastrophic losses in order to compound wealth more effectively over time. This is a distinctly different risk approach from the predominant reliance on diversification.

Preserving the Effects of Compounding

«Diversification lowers volatility but also long-term wealth. Tail hedging does the opposite: it preserves compounding while still protecting against large drawdowns,» Yarckin explained in his interview with finews.com.

The firm’s critique of diversification goes back to Bernoulli’s famous paradox. In the 18th century, he described the dilemma of shipping merchants in St. Petersburg: send out twenty ships, and on average nineteen return safely while one is lost to pirates or storms. Insurers charged more than the statistical probability of loss, ensuring themselves a profit.

From Bernoulli's St. Petersburg Merchant Paradox...

Bernoulli showed why merchants still bought policies: losing a single ship destroyed their ability to earn from it again and again, permanently impairing their wealth. Protecting against that one-off disaster mattered more than the cost of insurance.

«That paradox is at the core of our philosophy,» Yarckin said. «Convex insurance that pays off rarely but massively beats the hidden, ongoing costs of diversification. Diversification feels free, but if you measure it in terms of compounding, it’s expensive.»

... to Formula 1 Racing

Universa uses another metaphor from Mark Spitznagel's book, «Safe Haven: Investing for Financial Storms,» to illustrate the point:  Formula 1 Racing. During a race, teams fit soft tires that wear out quickly and come at the cost of time lost in a pit stop. But they maximize speed over the entirety of the race.

Spitznagel's investment approach works in a similar way: it may come with a visible cost, but it allows investors to run their portfolios «faster» by holding more risk assets. «That’s why our clients often shift from a 60/40 portfolio to something like 70 percent equities plus a tail hedge,» Yarckin noted. «The drag is lower, the resilience is higher.»

Benefits of Higher Equity Allocation

In practice, the lesson of the merchants and the racing tires is the same: give up a small, predictable cost to protect yourself against rare, devastating setbacks. That is also the essence of Taleb’s Black Swan — the recognition that improbable events can dominate long-term outcomes. Universa’s tail hedges are designed precisely for those moments when markets face the unthinkable.

When pressed on whether Universa’s strategy is a hard sell in times of calm waters and buoyant equity markets — as seen for much of the period since the global financial crisis — Yarckin countered that the opposite is true. «Even in rising markets, our clients see that we allow them to hold more equities than they otherwise could. So while the hedge itself may cost a percent in a given year, their overall portfolio often outperforms peers who are weighed down by diversifiers. That relative benefit is what convinces boards, family principals, or bank CIOs — not the line item of what Universa made or lost in a single year.»

Already Some Swiss Clients

Universa today manages a global client base, with roughly one-fifth of assets coming from outside the United States. Switzerland already features among its largest international relationships, and the firm sees particular resonance with Swiss institutions. «We fit very naturally with investors who have long time horizons and liability structures — pensions, insurers, endowments,» Yarckin said. «Pensions in particular have to balance annual payments to retirees with the long-term objective of staying funded. That is a tough balance. Proper, not-expensive risk mitigation gives them the confidence to remain invested through stress, and that makes all the difference.»

For Yarckin, the message to long-term allocators is straightforward: «With us, they can maintain their funded status even in periods of distress, without sacrificing long-term growth. That’s why more than half of our client base consists of pensions, insurers, endowments, and foundations.»

«Naïve Empiricism»

Entry, however, is reserved for large investors. Yarckin declined to give a specific number, noting that «we are not structured to deal directly with retail,» but SEC filings reveal that most of Universa’s funds require a minimum protection size of 150 million dollars.

Unlike many hedge funds, Universa’s strategy does not rely on forecasting. «We practice what we call naïve empiricism: learn from history without assuming the future must repeat itself,» Yarckin explained. «If you had exited equities just because they looked expensive, you would have missed the last 50 percent of this rally.»

Bullish Window Closing?

That does not mean the firm ignores the macro picture. «Our CIO, Mark Spitznagel, has been one of the most vocal equity bulls of the past three years — which sounds counterintuitive for a tail-hedge fund, but it was the right view,» Yarckin said. In 2022, when many market participants turned bearish, Universa’s leadership was publicly arguing for continued strength in equities.

Today, however, Yarckin warns that the bullish «window» is closing. «If markets reprice toward more normal valuations, history suggests they overshoot those levels. That could set up one of the larger financial events we’ve seen in decades,» he said of the firm’s view. «We can’t know where on the spectrum we will land, because policy decisions or even forces like AI could change the path. But the probability of a major dislocation is a lot higher than usual right now.»