Hedge Fund Verition Opens to Cash for Patient Investors Only

(Bloomberg) -- Hedge fund Verition Fund Management has opened to new cash for the first time this year, but is pushing clients to lock in capital for longer if they want a piece of the action.

The U.S. firm is to accept money in a new share class that will allow investors to redeem just 8.33% of their assets every quarter, down from a previous 25%, according to an investor document seen by Bloomberg. That means it will take clients three years to withdraw all their money instead of one. 

The $4.2 billion money manager joins peers such as Millennium Management and Elliott Investment Management in pushing clients to invest for longer in a bid to avoid sudden withdrawals of capital and as investors' interest in hedge fund strategies rebounds. The $4 trillion-plus industry has seen a record number of funds close to new money. 

Since starting in 2008, Verition has never had a down year. It made a record 30.4% in 2020 to beat the 9.5% average gain in hedge funds tracked by Bloomberg, and has gained about 5% so far this year.

Multi-manager investment funds such as Verition are in high demand for their approach of spreading money across a team of traders. They raised $20 billion through July, the most for any strategy, according to data from eVestment. Twenty such money pools tracked by Julius Baer Group Ltd. have grown assets by 510% over the last decade and thirteen of them are no longer taking in cash.

Sticky, long-term capital also helps Verition's focus on niche strategies which typically have lower capacity to take in money and could take longer to succeed.      

Read More: Hedge Funds Are Hot Again. Good Luck Getting Into One You Want

Verition, which has 65 trading teams, was co-founded by Nicholas Maounis, the former chief investment officer of Amaranth Advisors LLC that collapsed in 2006, and Josh Goldstein, who previously was the chief operating officer of NM Holdings.

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