(Bloomberg) -- Karim Abdel-Motaal is closing his macro hedge fund after just over a year because he couldn't raise enough money, underscoring how difficult the market has become for startups.
The London-based money manager, who previously led emerging-market hedge funds at Man Group Plc's GLG Partners unit, started the fund in June last year, investing globally with a focus on developing markets. The fund, part of his firm KAM Portfolio Management, returned about 5 percent before fees this year, outperforming peers which suffered losses.
Still, he's shutting the money pool down.
“After careful deliberation, I have made the difficult decision to close the KAM Fund,” Abdel-Motaal said in a letter to investors. “We were unfortunately unable to scale within a reasonable time frame.” He declined to comment when contacted by Bloomberg.
Abdel-Motaal's decision reflects the challenges new hedge funds face in sustaining their businesses amid rising regulatory and compliance costs. Hedge fund firm launches are on course this year to reach the lowest level this century, according to industry tracker Preqin.
Read more: The Incredible Shrinking Hedge Fund
Investors are proving reluctant to provide capital to smaller managers and are instead tending to look for safety in large hedge funds with a solid track record.
This appetite for established players has, though, helped the macro hedge fund sector as a whole raise a net $15.2 billion this year through August, the most of any strategy, eVestment data show. The prospect of interest-rate hikes and increased volatility is also creating more money-making opportunities and boosting investment across the business.
--With assistance from Hema Parmar and Suzy Waite.
To contact the reporter on this story: Nishant Kumar in London at nkumar173@bloomberg.net
To contact the editors responsible for this story: Sree Vidya Bhaktavatsalam at sbhaktavatsa@bloomberg.net, Paul Armstrong, Patrick Henry
©2018 Bloomberg L.P.
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