Sunday, 7 February 2016
Last updated 1 day ago
Oct 1 2012 | 6:46am ET
Quantitative easing has been a boon to Centerbridge Partners' credit hedge fund. But it's also proving a damper on opportunities for the US$8.3 billion hedge fund.
Centerbridge on Friday told investors in its Credit Partners fund that it would return US$500 million. The firm said that it has as much as US$2 billion of the fund's assets simply sitting in cash due to the paucity of enticing options.
"Absolute yields are in our view strikingly low," Centerbridge wrote in the notice to investors, which was obtained by the Financial Times. "The market currently feels frothy. Should the markets continue on this upward trajectory, the fund will continue to raise cash and distribute it."
Centerbridge launched the Credit fund in 2007; it has returned some 65% since then, without using leverage and has made something of a habit of periodically returning capital to clients. It told investors it continues to actively seek out opportunities, especially in Europe, but that its earlier investments are simply producing too much cash to reinvest.
"While we have been selectively adding to new positions in the U.S. and particularly in Europe, we continue to generate substantial amounts of cash," the firm wrote. "Consequently, we have decided to return a portion to investors."
Centerbridge manages about US$20 billion.