Hedge fund investors, hope you like your money where it is, because it’s gonna stay there.
Wealth Bullletin: At least 10 hedge fund managers have put new restrictions on how much and when their investors can withdraw their capital, as the industry struggles to stem a wave of redemptions and poor performance.
The restrictions, made in recent weeks, cover hedge fund assets worth an estimated $21bn (€16.6bn), and come amid forecasts that assets under management will fall by as much as 25% this year and 30% of managers will shut their doors. At the same time, performance figures for the first part of October, obtained by Financial News, show many funds posted double-digit losses in just a few weeks.
Centaurus Capital and Polygon Investment Partners have put so-called “gates” in place, limiting what proportion of assets investors can withdraw at one redemption date. Gottex Fund Management, a fund of hedge funds manager, Wermuth Asset Management, Auriel and Atlantis Investment Management all suspended withdrawals in October until further notice. Atlantis, along with its peers, said it did this to ensure all investors were treated fairly and to protect the value of those still in the fund.
Others funds including RAB Capital, Ramius Capital, BlueBay Asset Management and Henderson Global Investors have all proposed favourable fees for investors for certain funds so investors will stick with them. The gates, vetoes and sweeteners have been instituted to slow or halt investors – who pulled a record $31bn from their funds last quarter – from doing the same on December 31, the next redemption window for most funds.
…A senior manager at a London-based credit hedge fund said these restrictions were only the start: “A lot more funds are going to gate their investors this year.”
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