Aethon launches $50M New York hedge fund using AI

Aethon, a New York hedge fund founded by George Kailas, launched with $50 million in initial capital and is seeking institutional investors. The launch capital includes an anchor allocation from a fund-of-funds separately managed account, plus commitments from institutional investors and ultra-high-net-worth individuals.

The fund combines a proprietary library of market signals with AI-driven portfolio management and automated trade execution. It employs systematic strategies across long, short, momentum, mean-reversion and accumulation styles and reallocates capital among the approaches that perform best in prevailing market conditions.

Position sizing and risk controls follow predefined rules, including profit targets, stop losses and time-based exits. An overlay adjusts net exposure as volatility changes.

Aethon’s signal library covers more than 2,000 equities and includes sentiment analysis of social media, analyst-rating models that weight forecasts by historical accuracy, and predictive models that estimate return probabilities for stocks and exchange-traded funds. The datasets were developed using market intelligence from Prospero.ai, a retail investor analytics platform Kailas founded in 2019. Prospero.ai reports interactions with more than 200,000 retail investors and over 20,000 monthly active users.

Kailas described the strategy as ‘built on more than two decades of research into identifying market signals that traditional quantitative models often fail to capture.’ He will step back from Prospero.ai’s day-to-day operations to serve as Aethon chairman. Adam Plante, Prospero.ai’s chief technology officer, will become chief executive of the retail platform. Aethon said a portion of the hedge fund’s profits will be directed back to Prospero.ai.

The firm intends to publish examples that show how selected signals are generated for individual stocks while keeping the overall investment process proprietary.

Aethon’s executive team includes chief technology officer Dave Lauer, formerly a high-frequency trader at Citadel and Allston Trading; head of AI Ezi Ozoani, who joins from Hugging Face; and head of trading Joe Bernstein, previously at Tower Research Capital. Other senior hires are Erik Smolinski as head of risk management, Dave West as head of infrastructure and Dr. Matt Carter as head of communications.

The launch takes place amid growing institutional allocations to systematic and AI-enabled investment strategies, with managers increasingly using machine learning for portfolio construction, signal generation and execution while retaining human oversight of research and risk management.