London Hedge Fund Nevsky Capital to Shut
January 05 2016 - 12:20PM
Dow Jones News
London hedge-fund firm Nevsky Capital plans to shut down and
return cash to investors, the latest closure in a struggling
industry.
After two lackluster years, Nevsky's flagship $1.5 billion
equities fund is "unsuited to current market conditions" because of
the growing influence of computer-driven trades from algorithmic
and index funds, the firm said in a statement.
Nevsky, which is headed by Chief Investment Officer Martin
Taylor and co-manager Nick Barnes, is also increasingly concerned
that market conditions "may continue to be more difficult for a
considerable period of time," the firm said. It cited the risk that
U.S. interest rates rise faster than expected and of an economic
slowdown in China.
The firm, which is based behind the Royal Academy of Arts in
London's expensive Mayfair district, is one of many hedge funds
struggling to navigate markets dominated by the actions of
hard-to-predict central banks. Plus, a lack of liquidity and the
increasing prevalence of computer-driven hedge funds can cause big
swings in prices of some securities.
Hedge funds on average lost 3.5% last year, according to early
data from Hedge Fund Research, their second year of losses in five
years. In the first nine months of last year 674 hedge funds were
liquidated, compared with 864 for the whole of 2014, according to
HFR. Among prominent closures in recent months has been fund of
hedge funds firm Liongate Capital and Fortress Investment Group's
flagship macro fund, while Mike Platt's BlueCrest Capital said last
month it would return outside investors' money.
While the fundamental goal of hedge funds is to perform decently
in good times and bad, recent bearish markets have taken a severe
toll on many funds —a product of their reluctance to place outright
negative bets.
A person close to Nevsky said the firm steered away from an
overall bet on falling prices because of the risks that "wild card"
events such as China adopting quantitative easing or a final spike
in stocks led by the technology sector would "prove very painful
for anyone who was short."
The Nevsky fund had earned an average of 18.4% a year since its
launch in September 2000. It lost 1.4% in 2014 and was up 0.9% in
the first 11 months of last year, the person close to Nevsky
said.
Write to Laurence Fletcher at laurence.fletcher@wsj.com
(END) Dow Jones Newswires
January 05, 2016 12:05 ET (17:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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