Caxton Caves On Hedge-P.E. Convergence

Jan 24 2008 | 8:22am ET

Hedge fund-private equity convergence has been the talk of the alternative investments town for the past several years. But the credit crunch has at least one prominent hedge fund diverging from the buyout business.

Caxton Associates has told investors its flagship hedge fund will stop making strategic—read: private equity—investments, and has rolled out a new share class that excludes even the existing long-term investments, MarketWatch reports.

The move is reportedly not a reflection of the performance of Caxton Global Investment’s strategic investments, but of growing discomfort among investors with having their capital tied up in illiquid, long-term investments.

Caxton told investors in a Jan. 1 letter that it will not pursue any new strategic investments. Investors wishing to redeem their investments will receive all of their money save that portion which is in long-term investments. Instead, they’ll receive new “FI” shares, which represent only the strategic investments, which made up less than 8% of the fund’s net asset value, Caxton said. The new shares also include a $235 million strategic investment reserve.

In addition, newcomers to Global Investments need not put a portion of their money in the firm’s private equity pocket: A new T share class will only include the fund’s main strategy, which focuses on short-term currency, financials, commodities and securities trading.

Global Investments returned an anemic 1.14% last year, while the firm’s Alpha Equity Fund boasted a 12.18% gain.


In Depth

Malik: The Science of Deal Sourcing 201

Aug 27 2015 | 5:35pm ET

Deal sourcing is understandably a hot topic among private equity firms because it...

Lifestyle

Rolling Art Advisors Marketing Collectible Car Fund As Uncorrelated Alternative

Aug 27 2015 | 6:47pm ET

A new fund is trying to provide investors with greater access to an emerging asset...

Guest Contributor

Agecroft Partners: Hedge Fund Industry Assets to increase $250B by Summer 2016

Aug 11 2015 | 11:29am ET

Assets will continue to flow into the hedge fund industry despite long-standing...

 

Editor's Note