Anchorage Capital Group is closing its evergreen credit hedge fund Anchorage Capital Partners.
The manager will close the fund due to the current challenges for an evergreen fund that allocates capital across the credit spectrum to generate equity-like returns with downside protection on an unleveraged basis, CEO Kevin Ulrich said in a letter to clients obtained by Pensions and investments.
The fund, which manages approximately $ 7.4 billion in assets under management, has generated an annualized net return of 9.5% since its inception in 2003, Ulrich said in the letter.
Despite the positive story and a net return of 18.5% for the year through November 30, Mr. Ulrich said: “In this current market where indiscriminate access to capital, high market multiples, default rates close to record lows and central bank policies favorable to risky assets, we believe that ACP’s asset-liability structure is not the best suited to take advantage of opportunities in the current market environment . “
Mr Ulrich added in the letter that further details will be provided and that the company “will manage the CPA through orderly completion of its investments and continue to return the remaining capital to investors. As such, we have suspended ACP buybacks so that we can return capital to all investors on a fair basis. We will continue to partner with ACP investors throughout the principal repayment process to create products and structures that will help them seize future credit opportunities with the most appropriate accountability structure. “
He said the liability structure of the company’s structured credit strategies and drawdown funds is best suited to today’s credit market.
Also in the letter, Mr. Ulrich said Yale Baron, global head of structured loans at the firm, and Thibault Gournay, Global Head of Research, will become Co-Chief Investment Officer of Anchorage Capital Group, and Nathalie Birrell, currently Chief Operating Officer, will become President. Mr. Ulrich, who previously served as CIO, will serve as Chairman of Anchorage Capital Group and will continue to serve as portfolio manager of Anchorage Capital Partners throughout the process of returning its capital to investors.
Former Anchorage Capital Partners investors understand the $ 22.7 billion Kentucky Retirement Systems, Frankfort, which is now the Kentucky Public Pensions Authority, and the $ 16 billion West Virginia Investment Management Board, Charleston.
A spokesperson for Anchorage Capital Group declined to provide further information.
Anchorage Capital Group has approximately $ 30 billion in assets under management.