Commodities fund Arbalet to close soon as investors flee: sources
By Barani Krishnan
NEW YORK (Reuters) - Commodities hedge fund Arbalet Capital is set to close over the next month or two, just a year and a half since its launch, after sluggish returns sparked an investor exodus at the firm, people familiar with the matter said.
Run by 30-year-old Jennifer Fan, one of the youngest hedge fund managers and among the few women in the business, Arbalet had nearly $700 million of capital at the peak of its fund raising last year, and its launch in April was one of the biggest of 2012.
Now, assets under management at the New York-based hedge fund have trickled to below $200 million.
People familiar with the situation at Arbalet said the fund was stricken by the departure of a few big investors who controlled the bulk of its capital. They said the fund would likely shut down over the next month or two.
"Obviously the fund's performance hasn't been great, but the bigger reason it's winding down is that its existing investors cannot be left holding a very high stake or risk after the exit of the rest," said a person with knowledge of the matter. "Most investors have tight compliance requirements on risk."
Officials at Arbalet declined to comment.
The fund posted a loss of nearly 9 percent last year, and was down about 6 percent through the first half of 2013, according to industry sources familiar with the returns.
The average commodities trading fund on the closely-watched Newedge Commodity Trading Index lost 2 percent last year and has slipped 2.5 percent in the year through August.
Schroders New Finance Capital, which had about $200 million in Arbalet at one point, was one of the more recent redeemers from the fund, industry sources said. David Mooney, co-portfolio manager at Schroders New Finance, declined to comment.
Maryland's state pension system, another of Arbalet's investors, has just under $40 million with the firm, slightly below its initial allocation in December. Michael Golden, a spokesman for the pension system, said in an email on Wednesday that Arbalet was still on file as one of Maryland's commodity managers. He did not comment further.
In Arbalet, which is named after a crossbow, Fan stuck to a strategy that had earned double-digit returns at her previous fund - looking for relative value among the energy and agriculture markets it traded in, by exploiting differentials in price, delivery dates and locations for the commodities it held.
She launched Arbalet from the remains of a relative-value commodities fund at Arrowhawk Capital Partners that she had run. That other fund had returned nearly 16 percent in 2011.
When the Darien, Connecticut-based Arrowhawk closed in April 2012, Fan took 10 staff with her and convinced some of the investors there to switch over, raising about $550 million in the process.
Other commodity funds launched by high-profile traders started with comparatively less money last year. Former Morgan Stanley commodities veteran, Neal Shear, began Higgs Capital in London with about $300 million. Former Touradji Capital star metals trader, Paul Crone, began trading at Citrine Capital in New York with around $100 million, industry sources said.
Graduating from New York University's Stern School of Business at 19, Fan joined Bank of America (BAC) as an intern in 2002. She then became an analyst at Morgan Stanley (MS), and rose to the post of head trader for index products.
(Removes extraneous word 'stand' from third paragraph)
(Editing by Bernadette Baum)
