Blackstone to Shutter Liquid Alternative Fund As Fidelity Exits

Apr 8 2016 | 10:23pm ET

Blackstone will close a liquid alternative mutual fund that invests in hedge fund managers due to a decision by Fidelity Investments, the fund’s main supporter, to no longer back it. Launched with some fanfare three years ago, the decision to liquidate the fund comes as performance concerns shake what has been steady investor interest in liquid alternative strategies.

The Blackstone Alternative Multi-Manager Fund has stopped accepting new funds and will liquidate by May 31, according to a securities filing. The fund expects to meet redemption requests by going to cash and cash equivalents. 

Blackstone launched the fund in August of 2013 as a dedicated vehicle for Fidelity Investments. It sought capital appreciation through a diversified global set of exposures, traded by alternative asset managers, which demonstrated relatively low beta to traditional markets.

Despite the travails of the overall hedge fund industry, the fund reportedly performed well during its lifetime. In its statement, Blackstone noted that it delivered strong risk-adjusted returns since its launch through the end of March, capturing approximately 66% of the performance of global equities with approximately 37% of the volatility.

The cumulative return of the fund outpaced the broader hedge fund industry over this same period by 12.4% net of fees and expenses, the company added. 

After reaching more than $1.2 billion in assets under management as recently as February, assets in the fund have fallen to $629.8 million. A similar, larger fund, named the Blackstone Alternative Multi-Strategy Fund, has the same investment objective and “has experienced significant demand across a broad investor base and has grown to approximately $4.3 billion since its launch in June of 2014,” Blackstone said in the statement. 

Blackstone is one of the world’s largest asset management companies, with over $330 billion in AUM deployed across a wide range of global private equity, real estate, public debt and equity, non-investment grade credit, real assets and secondary funds.

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