Two Sigma Debuts Hedge Fund to Capitalize on ‘Tax Aware’ Boom

Two Sigma Investments launched a hedge fund that jumps on one of the hottest trends in wealth management: minimizing taxes.

The quantitative firm debuted Two Sigma Beacon Fund this year, a so-called tax-aware long-short fund, according to people familiar with the matter, who asked not to be identified discussing private information. Such funds aim to lower levies by holding winners for longer and harvesting losses.

Two Sigma, which manages more than $70 billion, declined to comment on the new fund.

Rival quant firm AQR Capital Management has been successful at attracting capital for the strategy. It pulled about $32 billion ...