Prosiris Faces Client Exodus as Assets Fall to $1 Billion

  • Reza Ali's hedge fund firm is limiting client withdrawals
  • Other withdrawals in the pipeline over next several quarters

Prosiris Capital Management, the hedge fund founded by Goldman Sachs alumnus Reza Ali, has seen assets tumble by almost 40 percent in less than a year, and more money is slated to exit in the coming months.

Assets at Prosiris have declined to $1 billion as of March 1, the firm said in a March 30 regulatory filing, from $1.6 billion as recently as August. One investor that has a $400 million separate account with Prosiris has asked the firm to sell some positions and return a portion of its capital. The firm will make those liquidations over the next several quarters, said a person familiar with the request. Prosiris firm has told clients in its hedge fund that they can pull only 20 percent of their money in any one quarter.

Hedge funds are experiencing the worst period of outflows since 2009, with a net $16.6 billion leaving the industry in the last two quarters, according to Hedge Fund Research Inc. While $2.86 trillion is invested in hedge funds, poorly performing managers are seeing clients flee at a quicker rate than in previous years. In 2015, 979 funds closed, more than any year since 2009, according to the research firm.

Returns Fall

A spokesman from HL Group, which handles public relations for Prosiris, declined to comment. Ali didn’t respond to e-mails and calls seeking comment.

After falling 2.6 percent last year, Prosiris’s Global Opportunity fund dropped 3.9 percent in January and 2.5 percent in February, according to a person familiar with the matter. Since inception in July 2011, the fund has gained 57.5 percent.

Ali founded Prosiris in 2009 after three years at Goldman Sachs Group Inc. as a proprietary trader managing a multibillion-dollar credit portfolio that included credit derivatives. He started his credit-focused hedge fund in 2011 when Investcorp gave him between $50 million and $100 million.

At that time, Deepak Gurnani, Investcorp’s head of hedge funds and chief investment officer, said Ali was chosen because he managed significant amounts of money during the credit crisis and performed well.

Ali raised the bulk of his assets after 2012, the year the fund returned 22 percent as distressed commercial and residential mortgage backed securities rebounded.

Before it's here, it's on the Bloomberg Terminal.