BlueBay goes long as hedge funds struggle
Funds at BlueBay Asset Management rose to almost $20bn (€15.4bn) in the first quarter of the year spurred by strong growth in its long-only investments, which helped to offset falls in the value of its hedge funds and highlighted the benefit of diversifying strategies amid jittery market conditions.
Assets under management at the London-listed group rose 7.2% in the first three months of the year to $18bn. The rise came despite a 13.5% drop in the value of its hedge funds, which fell to $3.2bn, according to its first quarter results released today.
Six months ago BlueBay managed $20.5bn, including $5.4bn in hedge funds. At the end of last year it managed $3.7bn in hedge funds and $16.7bn in total. Hugh Willis, chief executive of BlueBay, said in the results statement that investors were continuing to pull money from the group’s hedge fund range.
However, stock analysts at brokers Noble pointed to a compound annual growth rate of 90% over three years in its £367m (€412m) long-only funds and said that this strong performance meant that BlueBay is "well positioned to receive healthy inflows".
Fees from long-only funds now account for 62% of BlueBay's total revenues, Noble added. The remainder comes from hedge fund fees.
Some of BlueBay's long/short products have caused the company problems recently. In November it said it had discovered valuations on its $600m emerging markets hedge fund had been unexpectedly altered. Simon Treacher, the fund's manager, left the firm, although BlueBay said his departure was unconnected to its decision to shut the portfolio down.
In July last year, as market conditions led the hedge fund industry to a record 19% loss measured by analysts Hedge Fund Research, BlueBay locked investors in its flagship Value Recovery hedge fund into their investments until December next year, Nobles said.
While curbing withdrawals incurred the displeasure of many clients last year, Noble welcomed the development in its broker note this morning. The brokers upgraded their recommendation for BlueBay shares from negative to neutral, and said that the risks to its hedge fund business had "reduced significantly" after the lock-in and the closing down of Treacher's fund.
BlueBay is shedding staff and selling office space in New York after relocating its US operations to Connecticut. Shares in the company fell by 80% last year, and were down by 3.7%, to 167.75p by 09:30 GMT today. They have, however, risen by about 140% this year.
BlueBay declined to comment for this article.
--write to dwalker@efinancialnews.com
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