- Argentiere Capital, Horseman Capital say they have enough
- $15 billion pulled out of funds globally in first quarter
As the global hedge-fund industry suffers the biggest outflows of cash since the end of the financial crisis, some money managers are facing the problem of plenty.
Deepak Gulati’s Argentiere Capital AG is turning away investors after amassing $2.4 billion, while the Horseman Global Fund in London told clients enough is enough at $2 billion. It’s a move hedge funds typically make when a surge in assets under management triggers concern that overseeing too much money could harm returns.
Chris Rokos, the Brevan Howard Asset Management co-founder who started his own investment firm last year, planned to stop accepting new money at the start of February for at least a year after raising $3.5 billion, a person with knowledge of the matter said in January. Hedge funds worldwide were hit by the worst outflows in almost seven years last quarter as clients pulled a net $15 billion, according to Hedge Fund Research Inc.
“The reason why we closed was because we had a lot of inflows and we wanted to be disciplined in terms of the growth of the business,” said Barry Thomas, head of marketing at Zug, Switzerland-based Argentiere.
Question of Balance
The hedge fund was started by Gulati and a team of former colleagues from JPMorgan Chase & Co. in 2013 with about $300 million. It closed to investors from April 1, Thomas said.
The fund gained more than 4 percent in the first two months of this year and lost 3.5 percent in March, according to a person with knowledge of the matter who asked not to be named because the information is private. Thomas declined to comment on the fund’s performance.
Russell Clark, who manages the Horseman Global Fund at Horseman Capital Management Ltd., told investors in a newsletter this month that his firm is now operating a waiting list for investors.
Clark’s global fund gained 8 percent in January and 1.5 percent in February but lost 9.6 percent in March, according to the newsletter, the contents of which were confirmed by a spokesman for the firm. Investors used the decline last month to allocate more capital to the fund, Clark said.
A spokesman for Rokos Capital Management declined to comment.
“It’s a question of the balance between your business and your fund’s performance,” said Chris Hawkins, a money manager at Gottex Fund Management, which invests in hedge funds. "From a performance point of view, it’s right to be keeping as nimble as possible and that means not letting your assets under management balloon."
Investors are exiting hedge funds disappointed by their performance during market turmoil in the second half of last year and the start of 2016. Even the best-known managers including John Paulson, Chase Coleman, Andreas Halvorsen, Ray Dalio and Bill Ackman suffered losses in some of their funds last quarter.
Hedge funds lost an average 2.6 percent in the first two months of the year on top of a 1.1 percent decline in 2015, according to the HFRI Fund Weighted Composite Index. They recovered some losses in March as equities and commodities markets rallied.
Money manager are facing cash withdrawals just as Goldman Sachs Group Inc.’s Mike Siegel and UBS Group AG are advising clients to increase allocations to alternative money managers as a protection against volatile markets. Siegel, who oversees about $190 billion at the bank’s asset-management unit said insurers should use hedge funds to diversify even after their recent declines.