Drake Pulls The Plug On Remaining Hedge Funds

Jun 5 2008 | 2:00am ET

Drake Capital Management is getting out of the hedge fund business, for now.

The New York-based firm, which in April announced that it would liquidate its flagship hedge fund, said Tuesday it will do the same with its other two hedge funds. But it is moving forward with plans for new hedge funds, which will begin fundraising later this year.

The decision to wind down the Absolute Return Fund and Low Volatility Fund is not unexpected: The firm said it would consider “substantially similar” options for those funds as for its closing $2.5 billion Global Opportunities Fund.

Drake said in a filing with the Irish Stock Exchange that its funds are “well-positioned to avoid forced sales.” The firm will begin to sell the hedge funds’ assets, making a first distribution at the end of the month. Most of the money is expected to be back in investors’ pockets by the end of the year, and the liquidation completed by the end of March 2009.

Most of Drake’s hedge fund investors—the firm also runs several billion dollars in long-only funds—were already heading for the door, forcing the firm to suspend redemptions in December after disastrous year in which its funds suffered double-digit losses. Global Opportunities has lost a further 5% this year, and Absolute Return, which manages $1.4 billion, 12%, according to Dow Jones Newswires.

Despite the setback, Drake plans to move forward with plans to launch a new group of hedge funds. In April, the firm said its new Absolute Return Fund had already garnered more than $300 million in commitments. The firm said it will launch other new funds with “substantially similar” strategies to those of the closed funds.

RELATED STORIES

Drake To Liquidate $2.5 Billion Flagship
Drake Asks Investors: Should We Liquidate?
Drake Puts Brakes On Redemptions After Big Losses


In Depth

bfinance: Fees Falling Across Asset Classes, Yet Overall Investor Costs Still Climbing

May 16 2017 | 9:53pm ET

Despite unprecedented attention on fees, new research from investment consultancy...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Risk-Based Compliance: Why Oversight Of Outsourcing Is Critical

May 10 2017 | 7:02pm ET

Compliance is notoriously one of the trickiest middle office functions for funds...

 

From the current issue of