Hedge fund Kamunting Street Capital Management is returning outside capital and will convert to a family office, founder Allan Teh said by phone today.
Kamunting, also known as K-Street, decided to hand back remaining client money after one of its largest investors redeemed as of March 31, Teh said. He started Greenwich, Connecticut-based Kamunting in 2004 and the firm oversaw $982 million in regulatory assets as of Dec. 31.
“In a zero interest-rate environment, it’s much more difficult to make money without taking more risk,” Teh said. He added that the firm’s largest investor was no longer interested in having a large exposure to the credit strategy he trades. K-Street sought to profit from price differences between credit instruments.
Its main fund lost about 4 percent last year after holdings of high-yield debt declined. He attributed the decline to forced selling because of the collapse in oil prices, the surprise departure of Bill Gross from Pacific Investment Management Co. in September and a plunge in Fannie Mae and Freddie Mac securities.
Hedge funds have been closing their doors or returning outside capital at a rapid clip amid new regulations and as returns have trailed benchmarks. In 2014, 864 hedge funds closed their doors, according to data provider Hedge Fund Research Inc.
The trend has continued this year. Patrick McCormack said last month that he would close his stock-focused Tiger Consumer Management. Weeks later, a person familiar with TigerShark Management, led by Tom Facciola and Michael Sears, said the firm planned to return outside capital. Gideon King decided to shutter his approximately $1 billion Loeb King Capital Management in January, calling the business of managing hedge funds “cumbersome.”
Teh’s firm will continue to operate with about $300 million of his own money, he said. “It’s business as usual as far as I’m concerned,” he added.
A March regulatory filing for Kamunting said some of its funds were in the process of liquidating.