Billionaire Investor Soros Abstains From Running External Money

(July 26, 2011) — Hedge fund veteran George Soros is expected to give up running external cash.

After more than 40 years running hedge funds, Soros said that Washington’s increased oversight of the once unregulated industry was a primary reason behind his decision to cease running external cash, according to Bloomberg News.

According to the news service, Soros Fund Management will continue to manage money for Soros and his family. However, it will return money to outside investors by the end of 2011.

A letter obtained by The Associated Press on Tuesday — sent to investors in the Quantum Endowment Fund — revealed that Soros Fund Management is making the change because of new rules that will expand hedge fund disclosure requirements.

Soros joins an expanding list of fund managers who have recently reconfigured their businesses as new regulations have become more stringent. Earlier this year, for example, Carl Icahn also returned money to outside investors.

In other recent news regarding Soros, the billionaire investor’s $28 billion hedge fund recently slashed its stake in a variety of gold investments. In the face of a weakening in the US dollar in recent years, the billionaire investor and philanthropist had increased his stake in gold, silver and other precious metals. Yet, in early May, according to the Wall Street Journal, Soros’s New York-based fund — Soros Fund Management — decreased its holdings of the gold-backed exchanged-traded fund SPDR Gold Trust by 4.7 million shares to 49,400 shares, valued at $6.9 million at March 31.

The news is discouraging to gold investors because Soros has been perceived as a leader in pursuing gold over the past two years, according to Mark Luschini, chief investment strategist at Janney Montgomery Scott, a regional broker-dealer. “Anytime someone of that prominence and success from an investment management standpoint makes such a change in allocation, many investors are likely to follow,” he told aiCIO, adding that for a typical investor, gold is still a smart standalone investment when around 3-5% of a portfolio.