Monday, 24 October 2016
Last updated 15 min ago
Jul 26 2011 | 12:12pm ET
Soros Fund Management, one of the oldest, largest and most successful hedge funds in history, will return outside money to investors and become a family office.
Client assets at the New York-based firm currently account for less than $1 billion of the $25.5 billion that it manages. But the transition means the effective retirement of George Soros, the legendary investor who will turn 81 next month, and the exit of his top money manager, Keith Anderson.
In a letter to investors, Soros' sons, Jonathan and Robert, who serve as co-deputy chairmen of the firm, characterized the move as the culmination of a transition to a family office begun in 2000, when one of Anderson's predecessors, Stanley Druckenmiller, left the firm to found his own hedge fund. But the two also blamed the Dodd-Frank financial regulation law, which would have required Soros to register with the Securities and Exchange Commission by early next year.
"We have relied until now on other exemptions from registration which allowed outside shareholders whose interests aligned with those of the family investors to remain invested in Quantum," the Soroses said, referring to the firm's flagship hedge fund. "As those exemptions are no longer available under the new regulations, Soros Fund Management will now complete the transition to a family office that it began 11 years ago."
Soros, a Hungarian émigré who has become one of the world's most generous philanthropists and donors to liberal causes, is perhaps most famous for his $10 billion bet against the British pound in 1992, which forced the currency out of the European Exchange Rate Mechanism. But Soros was hardly a one-trick pony; Soros Fund Management or its predecessor have averaged annual returns of 20% since 1969, although this year the fund is down about 6%.
"We wish to express our gratitude to those who chose to invest their capital with Soros Fund Management LLC over the last nearly 40 years," Jonathan and Robert Soros wrote. "We trust that you have felt well-rewarded for your decision over time."
Anderson's plans are unclear. He has worked at Soros since joining the firm from BlackRock in 2008.
Druckenmiller shuttered his own hugely successful hedge fund, Duquesne Capital Management, last year and launched a family office. Earlier this year, 75-year-old Carl Icahn also decided to return outside capital.