In an honest and somewhat bold move to protect the investments from his clients, hedge fund manager Louis Bacon has made the decision to return 25% of his main fund back to the original investors. The reason for this is because forecasts show that the fund may struggle to see the returns required to make a profit for those who initially invested.
The $2 billion will be available for these investors to then choose an alternative method for raising capital. Whilst it's unusual for this to happen, those who entrusted their money into the fund must be breathing a sigh of relief at Bacon's ethical approach to managing their money, especially as it will mean losing his usual 3% management fee, in this case approximately $60 million.
Other hedge fund managers may follow Bacon's example and start returning funds in a market which is struggling to perform. Holding on to a losing position is not something a hedge fund manager will usually condone, and without suitable alternatives it seems that returning investments is the right, and wise, choice.
Many other hedge fund managers have already closed their fund to new customers, insisting on riding the storm with their existing clients and not risking any other capital in such a volatile market.
Hedge Fund experience..
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