Sat. Nov 27th, 2021

Millennium Management, one of the world’s largest hedge funds, is giving back about $ 15 billion to investors while also raising billions of dollars in a private equity-style format while trying to build a longer-term, more stable asset base.

The New York-based firm, which manages more than $ 57 billion in assets and is headed by billionaire Israel Englander, has sought to shift the balance of where investors’ money is kept in moves that could cost him about $ 40 billion in the longer term. give. assets.

As part of the plan, the firm is returning money from a shorter-term stock class that will allow clients to leave in full within a year, a person familiar with its plans said. However, this will give them the option to rather invest in a longer-term stock class that will take them five years to fully exit.

In addition, Millennium is also raising money that will be pledged to the firm and that it can claim within three years, in a structure similar to that used by the private equity industry. Once called, that money, which is expected to be about $ 10 billion, will move to the firm’s long-term share class.

Millennium declined to comment.

A constant danger for hedge funds is the ability of investors to redeem their money. While this often requires notice periods, with windows sometimes opening only monthly or quarterly, it can nonetheless mean that a fund with poor short-term performance can quickly lose assets.

Such an asset base can also make it difficult for funds to take longer-term positions or bet on less liquid assets. A long-term asset base is also seen as an important selling point when trying to attract the most talented traders.

During the global financial crisis, investors drew about half of Millennium’s assets, even though the firm suffered only a small loss in 2008.

However, the demand from investors to enter Millennium, which holds one of the industry’s top performance records, has allowed it to renew its capital base in a way that few other firms are capable of. Outside of 2008, the fund has not suffered a negative year since 1990 and last year it made up 25.6 percent, according to investor documentation seen by the Financial Times.

Together with previous money raised in a longer-term format, and about $ 8 billion invested by Englander and other Millennium partners and employees, about three-quarters of its assets will be longer-term capital once investors’ pledged capital is raised. The move was first reported by Bloomberg.

So-called multi-strategy funds, which employ dozens or even hundreds of small teams of traders in a range of assets, were one of the big winners during the coronavirus pandemic. This year, Millennium rose about 10.9 percent, a person familiar with the matter said.

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