Brynjolfsson's Armored Wolf to Shutter, Become Family Office

  • Hedge fund is returning client capital, money manager says
  • California firm currently has about $250 million in assets

John Brynjolfsson, the chief investment officer of Armored Wolf, said he is closing the money management firm to outside investors and converting it into a family office that will oversee his own wealth, after its largest fund was hit by the slump in commodities.

“I’ve been doing this for a long time and I’m looking forward to a sabbatical,” Brynjolfsson said in an interview Monday. “The five-year bear market in commodities has made the decision easier for me.”

Armored Wolf, based in Irvine, California, currently has about $250 million in assets under management, Brynjolfsson said. He said he expects to complete the return of client money by year-end.

Brynjolfsson, 51, started the firm in 2008 after working at Pacific Investment Management Co. , where he focused on inflation-linked bonds and commodities. Armored Wolf pursued a global macro strategy emphasizing real assets, according to its website, and oversaw $971 million in assets at the end of 2012. The firm’s main commodity fund slumped this year amid a global selloff in commodities that pushed the Bloomberg Commodity Index down 25 percent in the past year.

The index just ended its worst quarter since the 2008 financial crisis, declining 14 percent in the three months through September.

‘Based Upon Scale’

“The asset management business is based upon scale, and at our scale, we just couldn’t justify staying in business,” Brynjolfsson said. He said that the bear market for commodities is very close to bottoming out, adding that the same was true for inflation.

Armored Wolf also managed an unconstrained fund, which returned about 3.5 percent during the past 12 months, besting about 98 percent of its peers, he said.

In addition to his own funds, Brynjolfsson managed the Eaton Vance Commodity Strategy Fund, a mutual fund that has declined 26 percent in the past year, ranking it ahead of 68 percent of peers. Boston-based Eaton Vance said in a regulatory filing on Friday that it would assume direct responsibility for the commodity strategy fund’s day-to-day management by Nov. 30. The fund’s assets totaled $91 million as of Sept. 30, according to data compiled by Bloomberg, down from almost $390 million a year earlier.

During his 19-year career at Pimco, Brynjolfsson started the Newport Beach, California, firm’s category of real return funds and built it into a business with $80 billion of third-party assets under management.

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