Strategic Value Gives Up On Market-Neutral Fund

Apr 28 2008 | 7:13am ET

Strategic Value Partners is closing its $600 million market-neutral hedge fund because it expects the strategy to be on the ropes for at least five years.

The Greenwich, Conn.-based firm told investors that its market-neutral fund “is simply not viable in today’s environment” in a letter from founder Victor Khosla obtained by Bloomberg News. Investors in that fund, the Credit Opportunity Fund, which shed 6.4% in the first quarter, have the option of moving their investment to Strategic Value’s $4.4 billion distressed securities Restructuring Fund.

Investors who choose that option—Khosla indicated that two-thirds of Credit Opportunity clients are interested in such a move—will have performance fees waived until it recoups their loss in Credit Opportunities. Restructuring fell 2.3% in the first quarter.

Khosla, whose firm is raising funds for both Restructuring Fund and its private equity Special Situations Fund, said distressed debt offers a very attractive long-term opportunity.

“The nine months leading up to March 31 have seen a substantial sell-off in the credit markets, setting up that once-in-a-7-to-10-year investment opportunity,” he wrote.


In Depth

Q&A: Reg A+ Will Transform the Alternative Asset Landscape

Jul 7 2015 | 4:03pm ET

In addition to easing capital formation for small companies, Regulation A+ has enormous...

Lifestyle

Fiat Chrysler Files Paperwork For Ferrari IPO

Jul 23 2015 | 5:05pm ET

Italian sportscar maker Ferrari has taken a step closer to a stock market listing...

Guest Contributor

Lifting of Foreign Ownership Limits Signals Sea Change in Vietnam's Capital Markets

Jul 28 2015 | 3:01pm ET

The lifting of restrictions on foreign ownership limits in Vietnam later this year...

 

Editor's Note