David Perry plans to end the main operations of TeamCo Advisers LLC by early 2018 and ultimately shut the firm, he told Reuters in an interview, making his San Francisco-based business the latest casualty in the struggling fund of hedge funds industry.
Firms like TeamCo that manage portfolios of hedge funds for wealthy individuals and institutional investors have come under pressure as the performance of their underlying investments has lagged, making it harder for them to justify their extra layer of fees.
TeamCo, which manages about $1 billion, has started laying off staff and unwinding or transitioning its positions, Perry said. Its customized portfolios and a fund of funds together had peaked at around $1.72 billion in 2015.
The decision to close comes after David Perry's brother, billionaire Richard Perry, said last year he would shut his 28-year-old hedge fund firm, Perry Capital LLC, following a period of poor performance.
Richard Perry'sNew York-based Perry Capital, launched in 1988, became one of the industry's best-known hedge fund managers, with double-digit annual returns and around $15 billion under management by early 2008.
TeamCo's hedge fund investments produced a composite return of 3.4 percent net of fees from July 2007 through July 2017, with a gain of 4.8 percent this year through July, David Perry said.
That topped the HFRI Fund of Funds Composite Index return of 0.96 percent over the same period, but underperformed the benchmark U.S. S&P 500 stock index's 7.1 percent return with dividends.
"Whether it's an anomalous period or not, the last 9 years has been brutally challenging for hedge funds of virtually all styles and strategies," David Perry, 64, said.
"People have had it. They don't want to pay those fees for returns that are nowhere near as good as they expected from an absolute return basis."
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