The Carlyle Group is considering shutting its $4bn credit hedge fund Claren Road after investors asked to pull almost half of their money out.Investors may want to remember Carlyle's BlueWave Partners hedge fund which failed six months before the financial crisis. Then again, they may not.
Last September the fund was managing $8.5bn, its peak level, underscoring how quickly outside investors — and the influential consulting firms who advise them — can turn against an underperforming fund.
Investors submitted redemption requests totaling $1.97bn, or 48 per cent of the fund’s assets of $4.1bn at the end of July.
The fund will be down to $2.1bn at the end of September, when it has to honour the latest redemptions, and investors will have another chance to call for their money back in November.
Update 8-19-15: Leverage is a two edged sword. KKR found it cuts to the bone when bets go the wrong way.