RAB Loss Grows As Assets, Performance Decline

Jul 28 2010 | 1:54pm ET

Investors continued to punish troubled hedge fund RAB Capital in the first half, pulling tens of millions of dollars from its fund to widen its pre-tax loss.

The London-based firm said its loss for the first six months of the year grew by 22%, from £2.7 million in the first half of last year to £3.3 million this year. RAB’s assets under management also dropped, erasing gains made in the second half of last year. Client withdrawals of US$63 million from restructured funds helped push the firm’s assets under management down 7% in the first half to US$1.26 billion. In addition, RAB’s flagship Special Situations funds continued to post losses, and a European bank yanked its investment in the firm’s funds of hedge funds.

Just two-and-a-half years ago, RAB managed more than US$7 billion.

“It has been a tough start to the year, with volatile markets impacting on investor allocation decisions, particularly for equity products,” CEO Stephen Couttie said. “However, a combination of some compelling investment opportunities in RAB funds, fund performance, and the early signs of improving investor appetite mean that we remain positive about the outlook for new asset gathering.”

Revenue at RAB dropped by more than a quarter to £5.67 million, as management fees dropped by more than £800 million and performance fees totaled just £486,000. Its net loss grew by 14% to £2.34 million.

Amidst its reduced circumstances, RAB also announced that it would cut its first-half dividend to just £0.10, from £0.60 in the first half of last year and £0.50 in the second half.

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