Fortress hedge funds face $4.5bn in redemption requests
Fortress Investment Group, the alternative asset manager that went public last year, posted a net loss of $57m for the third quarter as investors filed requests to remove $4.5bn (€3.5bn) from liquid and hybrid hedge fund strategies following their mixed results.
Most of the third-quarter loss stemmed from the compensation agreement for directors tied to the company's initial public offering in February last year. Revenues fell 25% to $185m over last year.
Fortress’ liquid hedge funds had $9.1bn in assets under management as of September 30.
The global macro and commodities funds had $900m in redemption requests for the third quarter. The funds have received an additional $1.7bn in redemption notices for the year to date.
Net returns for the Drawbridge Global Macro fund were down 11.1% for the third quarter and declined 13.5% for the year to date following market volatility. Fortress estimated net returns for the fund fell 7.4% in October.
Fortress Commodities Fund, which was launched in January, fell 1.6% in the third quarter, but was up 7.2% for the first nine months of the year.
Fortress offset redemption requests by raising over $6.4bn in new capital for the year through November 1, including nearly $2bn for its hedge funds.
The hybrid hedge funds had $8.2bn in assets under management as of September 30, a 10.8% increase over the previous 12 months. The hybrid funds have amassed $2.2bn in redemption requests for the year to date. Unlike typical hedge funds, hybrid hedge funds have an average lock up of 3.3 years.
Earlier this month, investors in Och-Ziff Capital Management withdrew $720m (€554m) more from the firm’s products than they put in during the third quarter
Investors pulled about $31bn (€23bn) from hedge funds in the third quarter of this year, the largest amount since at least 1993, according to Hedge Fund Research.
—Write to Stephanie Baum at sbaum@efinancialnews.com
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