Arrowgrass Prepared To Pull Plug On Stock Fund

Sep 22 2011 | 2:03am ET

Arrowgrass Capital Partners may shut its equity hedge fund as poor performance and investor redemptions have cost the vehicle more than 90% of its assets.

The two-year-old stock fund is on the ropes due to a difficult 2011; it is down 14.5% this year after losing 8.65% last month. But even more damaging for Equity Focus' prospects are its dwindling assets under management, which stand at just US$30 million—down from US$400 million at the beginning of the year.

London-based Arrowgrass has allowed investors to flee in advance of its regular redemption dates following the August freefall, the Financial Times reports.

Arrowgrass launched the equity fund, helmed by SAC Capital Advisors veteran Andrew Billett—two years ago, just one year after the firm spun off from Deutsche Bank. It was a quick hit, forcing the fund to restrict inflows, and it did well in both 2009 and 2010 before hitting the skids this year.

Arrowgrass' flagship Master fund is essentially flat year-to-date after losing 2.7% in August. And Equity Focus' woes haven't cost the firm too dearly, as its assets under management have remained stable at about US$4.1 billion.

Arrowgrass may be losing its stock fund. But it has definitely lost its macro strategy chief.

James Barty has left the firm due to health reasons, according to the FT. Before joining Arrowgrass, Barty was an economist at Deutsche Bank.


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