Hedge Fund Arrowgrass closes after a wave of redemptions Financial Advisor

September 13, 2019

Bloomberg – Arrowgrass Capital Partners, the hedge fund launched by a group of former Deutsche Bank AG traders, plans to close after a new round of investor buybacks.

The eleven-year-old company, which employs more than 100 people in London and New York, will return and close down capital, according to an investor letter issued by Bloomberg. His fortune had already halved after managing $ 6.4 billion in 2017 before receiving applications to withdraw another billion, people said.

Even in an industry where legions of companies struggle to attract and hold investors' money, Arrowgrass is fast-tracked. The patience of customers eased as the company struggled to achieve satisfactory returns, and last month litigation ensued over the departure of a senior executive who became publicly known.

However, Arrowgrass blamed central bank policy for its decline.

"Ten years after the start of the current cycle, as we watch global central banks launch a new round of quantitative easing, we can not reasonably identify a short-term catalyst that would signal the end of the current cycle," said Nick Niell Die Gründer the company wrote in the letter.

Reasonable value

The investment strategies of the hedge fund have been optimized for a normal business cycle of five to seven years.

TruFin Plc, a financial services company listed on the London Stock Exchange, majority owned by Arrowgrass, confirmed the company's decision to close the fund.

"Arrowgrass has confirmed that the divestiture process is proceeding well and is geared to delivering value for its investors over time," said TruFin statement, Henry Kenner, co-founder of Arrowgrass, is Chairman of TruFin,

The Arrowgrass Master Fund slipped 2.5% to 23rd August this year, having posted a low single-digit return since 2016. This is clear from a separate investor update from Bloomberg. By contrast, according to Eurekahedge, hedge funds rose by a total of around 6.4% in the first eight months. However, Arrowgrass never posted a loss for the full year, one respondent said.

A company spokesman declined to comment.

Weak performance

Customers worldwide are pulling back from hedge funds after years of poor performance that did not justify their relatively high costs. Investors have tore nearly $ 56 billion this year – according to eVestment 50% more than 2018 in total. More hedge Funds have closed as started in each of the last three years, and those who start are usually born much smaller than funds before the financial crisis.

Arrowgrass was founded in 2008 by Niell, Kenner and other former dealers of Deutsche Bank. The multi-strategy money manager focuses on event-driven and relatively valuable investments and sometimes relies on the success or failure of corporate takeovers. The company is expected to abandon its US non-performing loan business last year and reduce jobs given the poor performance of its flagship fund.

Michael Edwards, who served as the global head of the event-driven strategy and later oversaw US operations, said in a lawsuit last month that the company was trying to persuade him to postpone the exit to avoid investor buybacks. He said a so-called key-man departure clause would allow certain major investors to opt out, potentially costing the company tens of millions of management fees.

Arrowgrass accused him of violating his agreement with the company and tried to get back money that was not supposed to be paid out. He declined to comment when he was reached by Bloomberg.

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