Whitebox Advisors LLC has shuttered its three mutual funds following poor results, and the funds will be liquidated on January 19th.
Earlier this month, Lucidus Capital Partners and Third Avenue Management also announced closure of their mutual funds.
Whitebox closes three mutual funds
Ending its foray into mutual funds, Whitebox Advisors LLC, said it has shuttered all three of its three mutual funds after poor results. According to Amara Kaiyalethe, a spokeswoman, the three mutual funds, which collectively held over $300 million, were closed on December 17th, and will be liquidated January 19th.
She said “All redemptions are being met” and the firm will focus on the nearly $4 billion it has in hedge funds. She said the decision to close the mutual funds was related to performance and the concentration risk investors that remained in the funds faced as redemptions accelerated.
The Whitebox Tactical Opportunities Fund is the biggest among the three mutual funds, which less than two years ago managed over $1 billion, but tumbled by over 21% this year. The fund has suffered a rush of investors heading towards the exits. The fund managed about $240 million at the time it was closed.
The Whitebox Market Neutral Equity Fund is down approximately 6% so far this year, and the Whitebox Tactical Advantage Fund is down about 1%. At the time of closure, the Whitebox Market Neutral Equity Fund managed $52 million, while the Whitebox Tactical Advantage Fund managed about $22 million.
Tactical Opportunities Fund has a portfolio mix of 27% equity, 18% fixed income, cash 43%.
In its commentary for the second quarter ended June 30, 2015, the Tactical Opportunities Fund indicated that “as in the first quarter of the year, negative returns remain concentrated in the area of our strongest conviction: shorts on current “glamour” high-growth US stocks that the market loves but we believe to be overpriced”.
Whitebox joins other high profile funds in closing funds
Interestingly, Whitebox’s announcement comes just after weeks a few other high profile funds announced their closure.
As outlined by ValueWalk, Third Avenue Management noted earlier this month that it’s liquidating its Third Avenue Focused Credit Fund. The high-yield bond fund has about $790 million in assets under management, and management decided to liquidate it because investor redemptions have been outpacing their efforts to liquidate without just running a fire sale.
In a rare move for mutual funds, Third Avenue indicated it is no longer accepting any more withdrawals for the time being. This means that investors who still have money in Third Avenue’s Focused Credit Fund won’t see all of their money for months or possibly even longer. It also means that management is attempting to liquidate the fund in an orderly manner without a fire sale.
Earlier this month, Lucidus Capital Partners, a high-yield credit fund, has also liquidated its entire portfolio, following a redemption request in October from a significant investor. According to a statement from Lucidus Capital Partners, the fund has exited all investments. The high-yield credit fund has liquidated its entire portfolio and plans to return the $900 million it has under management to investors next month.
In recent years, a number of mutual fund providers and alternative asset managers have in packaged hedge-fund like strategies into mutual funds that offer investors the ability to withdraw money on a daily basis. The number of new so-called “liquid alternative” strategies making their debut peaked last year. According to data provider Lipper, last year witnessed 123 new launches, up from 110 a year earlier and just 33 in 2009.