Drake To Liquidate $2.5 Billion Flagship

May 1 2008 | 12:05pm ET

The clients have spoken. New York-based hedge fund Drake Management will close its flagship Global Opportunities Fund. The move follows investors' opposition to a proposal to split assets between the current fund and a new fund, the firm said in a letter to investors yesterday.

Drake still plans to move forward with its new Absolute Return Fund, which has garnered $300 million in commitments.

“We are committed to launching successor vehicles for the funds later this year,” the firm said in the letter. Drake added that its founders, Anthony Faillace and Steve Luttrell, will decide what to do with the firm’s other two hedge funds by the end of this month.

Global Opportunities plummeted by 25% last year on bad bets on U.S. and Japanese bonds, among other investments. Drake suspended redemptions from the fund, in December, and in March offered investors three options: liquidating the fund and allowing investors to move their assets to a new fund, liquidating the fund outright, or extending the suspension of redemptions on the fund.

According to the letter, clients representing about $500 million of the fund’s assets voted for the switch, but others opposed splitting the assets, leading Drake to choose liquidation.

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