Morgan Stanley has spun off its wholly-owned hedge fund and plans to do the same to its quantitative proprietary trading desk, but isn’t racing to part ways with the several hedge funds in which it owns a minority stake.
The investment bank bought up stakes in seven hedge funds, including FrontPoint Partners, from 2006 through 2008. It later bought up the rest of FrontPoint, and once again owns a minority stake in the firm following its spin-off earlier this year. But while it’s set to hang on to its chunk of FrontPoint for only another five years, there are no plans to divest its stakes in Avenue Capital Management, Lansdowne Partners, Traxis Partners or the other hedge funds it co-owns.
Morgan Stanley Asset Management is “not in any rush to end its partnership with any of those entities,” the unit’s head, Gregory Fleming, told Dow Jones Newswires.
Under the Dodd-Frank financial regulation reform law, banks are only allowed to invest 3% of their Tier One capital in alternative investment firms.