Pine River hedge fund joins competitors in closing to new investment

Pine River Capital Management, a hedge fund with $4.5 bn in assets under management, has closed to new investors, joining a growing number of hedge funds that have stopped accepting new money, according to media reports.

Pine River told investors it would make the change as the market lacked the volatility that often presents hedge funds with significant profit opportunities and because major central banks are dominating markets, the Financial Times reports, citing unidentified sources familiar with the conversations.

A series of large, successful hedge funds have closed their doors to new investment recently, citing similar reasons, including the current high price of high-risk assets, the newspaper reports. It says DE Shaw closed several funds to new investment last year while other funds, including Baupost and Appaloosa, have even returned money to investors.

This trend is partly due to increasing difficulty in earning large profits and partly due to a recent inflow in new investment. Hedge fund industry research firm HFR says capital under management by hedge funds worldwide surged to $2.7 tn in the first quarter of 2014 as investors committed more than $26 bn in new capital to the industry. The figure set a seventh consecutive quarterly record for total capital.

The HFRI Fund Weighted Composite Index, HFR’s broadest measure of hedge fund industry performance, meanwhile, posted year-to-date gains last month of 1.99 percent. The S&P 500 index gained more than 4 percent at the same time.

‘Many hedge fund managers have assumed or maintain conservative positioning across various asset classes, cognizant of the balance between near-term opportunities and the intermediate-term risks as a function of cyclical equity and fixed income valuation levels,’ says Kenneth Heinz, president of HFR, in the firm’s June note to clients.