Hedge fund titan Louis M. Bacon has decided to return about $2 billion to investors after a particularly tough second quarter this year when his fund was down 3.18%. The return is particularly revealing in showing how liquidity has evaporated and volatility has been exaggerated in the markets.
This has made trading particularly difficult for traders who swing for the fences on currencies, stocks and bonds, such as Bacon, Paul Tudor Jones and George Soros.
The $2 billion return marks about a quarter of Bacon’s Moore Global Investment Fund. “I am more comfortable taking down the size of the fund than increasing the size of the positions in order to give clients an adequate return given the fees they are paying,” Bacon wrote in the letter to investors.
Investors currently pay a 3% management fee, nearly 1% higher than the industry average.
After the give-back, Bacon will personally manage approximately $6 billion.