Weak Hedge Fund Performance Hurt BlueBay Profits

Jun 17 2008 | 9:57am ET

London-based BlueBay Asset Management warned that it will miss analyst expectations due to weak hedge fund performance.

The news that BlueBay’s fiscal-year pre-tax profits will be “broadly similar” to last year’s £51.6 million (US$101 million), rather than the expected £59.9 million (US$117.2 million) sent the specialist bond fund manager’s shares down almost 15%.

Performance fees, which may be down by more than half, are the key culprits in the firm’s disappointing results. BlueBay said it has collected only £4 million (US$7.8 million) in such fees during the second half, leaving it with just £22.7 million (US$44.4 million) with less than a month left in its fiscal year. Last year, it earned more than £48 million (US$93.9 million) in performance fees.

BlueBay also said it had agreed to slash the fees on its US$2.7 billion Value Recovery Fund in exchange for a one-year lockup. Under the deal, the performance fee on the struggling fund will be cut from 20% to 15%, and the management fee to 1% from 2%, for 30 months. More than 80% of the fund’s investors agreed to the new terms, which prevent them from pulling their money before next July.

The news was not all bad for BlueBay: Assets under management are growing faster than expected; the firm added £3.5 billion (US$6.8 billion) since the beginning of the year, mostly in its long-only products.


In Depth

Bob Doll's Ten Market Predictions For 2016

Jan 7 2016 | 9:37pm ET

Well-known market strategist Robert Doll has published his annual list of ten predictions...

Lifestyle

Citadel's Ken Griffin Donates $40M To New York's Museum of Modern Art

Dec 22 2015 | 9:23pm ET

Citadel founder Ken Griffin has donated $40 million to New York’s Museum of Modern...

Guest Contributor

Hedge Fund Marketing - Making the Most of Your Salesperson

Jan 20 2016 | 8:11pm ET

In this contributed article, Bruce Frumerman of Frumerman & Nemeth takes a close...