"Soros To Shut $1.5 Bln Emerging Markets Hedge Fund"
Tuesday October 27 11:46 AM EDT
Soros To Shut $1.5 Bln Emerging Markets Hedge Fund
NEW YORK (Reuters) - International financier George Soros says he plans to close his $1.5 billion emerging markets hedge fund, which has dropped about 31 percent in value so far this year, and that Nick Roditi, who runs two other Soros' funds, was temporarily leaving for medical reasons.
Soros, one of the world's richest men and an active philanthropist, told investors in an Oct. 23 letter the Quantum Emerging Growth fund, which bets on emerging markets and emerging growth companies, would be shut due to ''corporate restructuring'' and to simplify the job of chief investment strategist Stanley Druckenmiller in coordinating
investments.
His flagship Quantum Fund, which has $8.7 billion in assets and invests all over the world, would likely assume positions held by the emerging market fund. Investors in Quantum Emerging Growth would have a choice of either cash or a special class of Quantum Fund stock, he said.
The hedge fund's closure was not tied to its recent performance but was part of an effort to consolidate management and trading of the various investments, a spokesman said. The fund rose 22.3 percent last year and 37.9 percent in 1996.
Hedge funds, investment vehicles catering to the very wealthy, have come under scrutiny the past few months after giant Long-Term Capital Management fund had to be rescued from near-collapse by a group of banks that coughed up more than $3.5 billion.
Similarly, investments in emerging markets have soured for many financial institutions as an economic downturn in developing countries pummeled the prices of securities and currencies in Asia, Russia and Latin America.
Soros told investors that Roditi, the outside manager with responsibility for the $1.75 billion Quota Fund and Quasar International Fund, would take a leave of absence because of an undisclosed health issue.
The Quota fund has fallen 13.6 percent in value from the start of the year until October 22, after the recent turmoil in global markets. But its compound annual growth from its inception to the end of September was 48.03 percent, it said.
''Quota Fund is currently very liquid,'' Soros said in the letter. ''We welcome redemptions but we cannot guarantee shares will be available without premium after Nick Roditi's return. In the interim period, we shall employ the assets of the fund on an opportunistic basis.''
Because Roditi was leaving temporarily, Soros also proposed merging the Quasar International Fund he managed into Quantum Industrial Holdings, a private equity investment vehicle. Quasar's investment strategy was changed in 1997 to mirror Quantum Industrial's.
''Merging these two funds would simplify the administration of the strategic investment program by placing it in a single fund and assure a continuation of macro trading for Quasar International Fund shareholders,'' he said. |
