The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Opinion

Hedge funds: Would you have one of these in the house?

In-house hedge funds look to have been a costly mistake for investment banks. Far better, it seems, is to take stakes in independent ones.

Investment banks and their in-house hedge funds were once thought capable of building a compatible, mutually beneficial relationship. It is now clear that they are unhappy bedfellows.

UBS had its reputation marred after its in-house hedge fund unit, Dillon Read Capital Management, was forced to wind down last year just 11 months after starting to trade, having incurred losses of $124 million.

Lehman Brothers has been forced to move $1 billion of assets from three troubled internal hedge funds onto its balance sheet. A better example still is Bear Stearns, which was brought down by its two in-house hedge funds.

Citi does not seem to learn, however. First, Tribeca, its initial multi-strategy fund, was pulled when it purchased Old Lane, run by Vikram Pandit himself. Now Old Lane has shut down as a multi-strategy fund as three of the six senior managers left their positions, Pandit included. Falcon, Asta and MAT, Citi’s fixed-income hedge funds, have lost as much as 75%, forcing Citi to put up hundreds of millions of dollars to help investors recoup losses. But still, Pandit in his role as chief executive of Citi, is considering spinning some of the teams within the multi-strat Old Lane into in-house single-strategy funds.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree