Pine River Is Closing Its Master Fund After a Plunge in Assets

  • Decision comes as firm is liquidating its China hedge fund
  • Firm still oversees assets in customized accounts and REITs

Pine River Capital Management is closing its master fund after a wave of client withdrawals that would bring assets below $300 million, according to people with knowledge of the matter.

The fund, which started in 2002, had about $1 billion in assets prior to the latest redemption schedule. Because the withdrawals would cause the portion of illiquid assets to increase relative to the overall fund, the managers discussed placing those investments in a segregated account called a side pocket, said the people, who asked not to be named because the matter is private. Investors approved of that plan but the firm’s managers ultimately decided instead to close.

A spokesman for Pine River declined to comment.

The multi-strategy master fund has suffered from years of lackluster performance against a backdrop of rising investor discontent with hedge funds’ high fees. The fund gained 1.7 percent this year through August, after gaining less than 1 percent in 2016 and dropping 2.75 percent the year prior, according to investor documents.

The decision marks another turn for the Minnetonka, Minnesota-based hedge fund firm, which has closed a handful of funds and seen staff departures over the last year or so. In June 2016, Pine River announced the closure of its $1.6 billion fixed-income fund, after one of its co-managers said he’d step back from active money management. Pine River is also liquidating its $560 million China hedge fund and ending long-short equity trading amid a shift toward event-driven strategies, Bloomberg reported this June and July. Additionally, the firm’s money manager Renos Dimitriou is planning on spinning out his $1.7 billion government bond-trading fund into a standalone company.

Pine River, whose mortgage bond bets after the global financial crisis helped fuel its assets under management, still oversees $1.5 billion in customized accounts and $4.1 billion across two real estate investment trusts -- Two Harbors Investment Corp. and Granite Point Mortgage Trust Inc. -- according to one of the people. That’s a fall from $15 billion in assets under management in 2015.

Since 2015, the hedge fund industry has lost more money than it’s attracted from investors in every quarter but one, according to Hedge Fund Research Inc. More hedge funds have closed than opened for the last two years, the data show.

— With assistance by Hema Parmar

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