UK - London hedge fund CQS is delaying planned soft closure for its flagship ABS portfolio to allow prospective pension scheme investors already conducting due diligence on the fund to complete their analysis.
CQS joins a small number of managers in the $2trn industry that have capped funds to new money since the crisis following strong inflows. Rivals Lansdowne Partners and Brevan Howard have also closed their flagship funds.
ABS manager Alistair Lumsden correctly predicted the sub-prime crisis in 2007, with investors in his fund making 179% in the two years to June 2009, a figure which fuelled strong inflows, including from pension funds.
One investor in the fund said ABS's board has proposed soft closing when assets neared $2bn.
"One of the reasons for waiting is to be mindful of pension funds, in particular, which take a number of months making decisions on hedge funds since the crisis," the investor said.
ABS will join CQS's Directional Opportunities fund, managed by the firm's founder Michael Hintze, in being capped to new money. An investor with CQS said the firm wishes to regulate inflows into ABS, protect performance from excessive inflows, and monitor returns with the fund at its current size.
CQS is believed to be reserving a small amount of capacity in ABS for its CQS Diversified investment trust, a fund of hedge funds listed on the London Stock Exchange. It has also done so for Directional Opportunities.
Lumsden told clients at a recent London conference the opportunities in asset-backed securities markets remain plentiful, even after the sharp end of the credit crunch passed over two years ago.
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