A third hedge fund has ceased operations within a week due to lackluster returns, The Wall Street Journal reports.
Tourbillion Capital Partners joins Highfields Capital and Criterion Capital Management’s shutdowns. It will refund the money to its clients and stop its main fund, the firm said in a Monday email.
The firm had $4 billion in assets in 2016, but had been struggling for some time. Its flagship fund was down 3.2% this year, and assets sank this year to about $2 billion, according to the Journal.
Tourbillion opened in 2013, returning 21% that year. Its returns were positive through 2015, but began to decline in 2016. It lost 13.8% last year, the publication’s sources said.
In the letter, Tourbillion’s founder, Jason Karp, told clients the fund had “recently not delivered the results that you expect of us and what we know we are capable of.” Its main fund is expected to return more than $1 billion in client money by the end of the year.
Karp and other senior members of the firm will continue to invest in stocks, but in a “radically different unconstrained manner,” the letter said, that would “allow us to focus only on our highest conviction ideas.”
As hedge funds struggle to perform, they must reevaluate their businesses. Some close, while others reduce their fees, which have come under criticisms from pension funds and other institutional investors in recent years.
Despite these closings, more hedge funds have launched in the first half of 2018. Industry index Hedge Fund Research reported 270 closures and 306 openings. At the end of the second quarter, the index reported 8,413 hedge funds in existence.
Tags: Hedge Funds, Jason Karp, Tourbillion