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Citigroup has extended a half-billion dollar lifeline a group of its hedge funds rocked by the credit crunch.
The Wall Street giant said late Friday that it has provided a $500 million line of credit to its Falcon Strategies hedge funds. The bank has also consolidated the funds’ $10 billion in assets and liabilities on its own balance sheet.
The Feb. 20 decision comes after the funds lost approximately 30% last year. A new, levered version of the Falcon funds plummeted by more than 50% in its first three months of trading.
The hedge fund bailout is the second for Citi in as many months: The bank propped up its CSO Partners fund last month with $100 million, after suspending withdrawals.
Hedge funds and funds of funds are seeing an increase in redemption notices as the industry plunges deeper into the red amidst regulatory constraints and the global credit crisis. More...
By Christopher Holt -- Cynics often describe hedge funds not as a unique asset class or investment strategy, but as a unique “fee structure.“ To some extent, they are correct. More...