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Thursday, 19 January 2017
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Oct 10 2013 | 9:01am ET
After 25 years, FX Concepts is getting out of the hedge fund business, as poor performance and investor redemptions proved too much for the one-time currency giant to survive.
New York-based FX said yesterday that it would close its investment management business and liquidate all of its hedge funds. The firm expects the process to be completed by the end of next month.
"Assets at the firm have dropped to levels that can no longer sustain the business," FX vice-chairman Jonathan Clark said. "The board has concluded that it is in the best interest of the firm's investors to conduct an orderly wind-down of open positions, close its funds and hand back any remaining mandates to clients."
FX, founded by John Taylor in 1981, was once the largest currency hedge fund in the world, with a peak of $14.2 billion in assets in 2007. That figure has dwindled to just $621 million—most of which belongs to the San Francisco Employees' Retirement System, which last month moved to redeem the entire amount.
FX said it will remain in the newsletter and currency-overlay business. Chief strategist Robert Savage told Reuters that the firm plans to "regroup and rethink our strategy and come up with a way to re-create ourselves."
The firm will lay off nearly half of its employees, nine of the remaining 20; the firm had already laid off a dozen over the past two weeks. At its peak, FX employed about 60 people. The firm will also close its London and Singapore offices.
FX has been battered by a brutal environment for quantitative hedge funds. Taylor said in July that "trend-following is dead" due to "financial markets pushed by political and central bank diktats."
Savage, who earlier this week said that almost anything, including a bankruptcy filing, was on the table, said that the board reached its decision on Tuesday, adding that the firm seeks to be acquired by another hedge fund or private-equity firm, and that FX was in talks with potential buyers.