Funds Hub

Money managers under the microscope

Little and large

April 15, 2009

The challenges of volatile markets and client redemptions are finally driving the consolidation in the hedge fund sector that some commentators have been expecting.

rtxccu6Yesterday it was announced that hedge fund firm Cheyne Capital would buy fund of hedge funds firm Altedge Capital, a smaller boutique, and appoint Altedge CEO and CIO Chris Goekjian as partner and CIO.

The deal bears some similarities to GLG’s move in January to hire the founders of smaller hedge fund firm Pendragon Capital and move across Pendragon’s shrunken asset base.

Clients are continuing to pull out money from hedge funds, albeit at a much reduced rate in March, but the overall wave of redemptions has left many firms that have posted decent performance figures with a less viable business model.

Combining with bigger firms that offer better distribution and a greater chance of surviving the downturn may well make sense for some small firms. Large firms in turn can benefit from the addition of talented managers, who could attract assets when the good times return.

For the industry as a whole it looks a way to retain talented managers who may otherwise have looked at other career options.

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