Monday, December 1, 2008

Tudor Jones Suspends Withdrawals from Flagship Fund

Hedge fund industry giant Paul Tudor Jones has suspended withdrawals from his $10bn flagship hedge fund and plans to split out toxic assets into a new fund with lower fees, according to FT.

The Tudor fund is down only 5 per cent but redemption demands are forcing the freeze.

Jones, in a letter sent to clients on Friday, said investors wanted back 14 per cent of their money at the end of the year. This would have left the remaining investors holding too large a proportion of illiquid assets, particularly corporate credit in emerging markets, the letter said.

“I recognise that a restructuring is an unwelcome, but I believe necessary, step against the backdrop of Tudor BVI’s 22-year history of unbroken profitable years,” Mr Tudor Jones wrote. “I believe it is but a brief step, however, on the road to important long-term changes for the benefit of all investors.”

These type of freezes by hedge funds have caused a lot of panic redemption request by hedge fund owners, and in turn has resulted in heavy selling by hedge funds to meet selling pressure.

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