negative portfolio returns have seen several hedge funds close down over the summer
GAM is among the groups that have closed down hedge funds over the summer following a period of negative portfolio returns.
It has liquidated its Persaud Global Currency fund, managed by Avinash Persaud, after it posted unsatisfactory performance. It was down 12.3% since its late-2003 inception. It closed, after redemptions, with $15m in assets.
The fund had been afflicted by a number of bad calls in the currency markets. Early this year the manager predicted a dollar-sterling rate of $2.22 against the pound, which went on to defy his expectations, peaked at $1.95 and then fell to $1.73. The dollar's rally against other currencies including the euro, the yen, the Swiss franc and others also caught the fund out.
By contrast GAM is looking to cap its £152.4m UK Equity Hedge fund managed by former Flemings manager Ross Hollyman once it reaches £200m.
The fund has some 30% of its assets in small caps and Hollyman said the product was being closed to new money to protect existing investors but this would not affect his existing investment style.
He added: "The fund will continue to use the same investment strategy and process that have contributed to it delivering an average annual return of over 11% since launch."
The product may well be reopened in the future. GAM's success saw it capping its funds of hedge funds early in 2004 after massive inflows. David Smith head of GAM's multi-manager division has gradually been reopening many of these products since the end of last year.
Energy funds have had a difficult summer, according to the managers of Enchanted Rock Capital, which closed its energy fund in August. It cited illiquid energy markets as the cause of its demise. Since its inception at the start of 2005, the $200m fund had declined 7.5%. The group has been looking to return 90% of the money to investors during September with the remainder to follow on completion of the fund's audit.
Ameriprise Financial, which shares a parent company with Threadneedle Asset Management in American Express, is in the process of liquidating three funds. The European market neutral, the US market neutral and the convertible arbitrage funds were not profitable.
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