More than half of the 10 largest shutdowns took losing leveraged credit positions, including two Bear Stearns Asset Management structured credit funds and the year’s biggest liquidation, Sowood Capital Management’s $3 billion Sowood Alpha Fund, according to a news release.
More long/short equity funds closed than any other strategy, with 16 funds representing $4 billion in assets. Multistrategy funds had the biggest losses in terms of assets, with five fund shutdowns representing $7.3 billion in assets, the announcement said
Among the notable closings were Citigroup’s September shutdown of the $2.5 billion Tribeca Global Investments and UBS Asset Management’s shutdown of Dillon Read Capital Management, which had raised $1.5 billion from outside investors.
Hedge fund closures fell sharply from the prior year, when more than 83 funds managing approximately $35 billion were liquidated. The collapse of a single firm, $9.1 billion Amaranth Advisors, was the most significant closure in 2006.
So far in 2008, hedge funds with $3.9 billion in assets have shut down, including Peloton ABS Fund and Sailfish Multistrategy Fixed Income Fund.
Research conducted by Absolute Return included only those funds that once managed $25 million or more in assets. More information is available at www.hedgefundintelligence.com/ar.
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