Blackstone to Shut Mutual Fund After Fidelity Pulls Out

  • Fund was started as dedicated vehicle for Fidelity Investments
  • A second fund with similar strategy has grown to $4 billion

Blackstone Group LP, the asset manager run by Stephen Schwarzman, will shutter a mutual fund that allocates money to hedge fund managers as the vehicle’s main backer, Fidelity Investments, is pulling out.

The Blackstone Alternative Multi-Manager Fund will no longer accept new money and will be liquidated by May 31, according to a filing with the U.S. Securities and Exchange Commission on Thursday. The fund’s investment adviser will seek to convert all of its holdings to cash and cash equivalents to meet anticipated redemption requests.

The fund was started in August of 2013 as a dedicated vehicle for Fidelity and returned an annual 3 percent since then, according to data compiled by Bloomberg. Assets in the fund have shrunk to $629.8 million from $1.2 billion at the end of February. At the end of last year, a Fidelity unit owned essentially all of the fund’s shares on behalf of its clients, according to regulatory filings.

Blackstone, in a statement late Thursday, said the fund had outperformed the broader hedge fund industry, as measured by the HFRX Global Hedge Fund Index, since inception.

A second, larger fund it offers with the same investment objective, the Blackstone Alternative Multi-Strategy Fund, “has experienced significant demand across a broad investor base and has grown to approximately $4.3 billion since its launch in June of 2014,” the New York-based firm said in the statement.

Multi-Strategy Fund

Blackstone also disclosed a management change at the multi-strategy fund, saying the investment committee with oversight responsibility for the fund will handle its day-to-day management, according to a separate filing.

Blackstone’s multi-manager fund has fallen 4.1 percent this year after gaining 4 percent in 2015. The multi-strategy fund has declined 2.8 percent in 2016 after returning 3.6 percent last year.

The funds employ 18 outside firms as well as Blackstone Senfina Advisors, according to the latest regulatory filings. The managers included Anthony Melchiorre’s Chatham Asset Management, Stephen Feinberg’s Cerberus Sub Advisory I and Two Sigma Advisers, run by John Overdeck and David Siegel.

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