Soros returns $1bn to investors as he ends his hedge fund career
Wednesday 27 July 2011
George Soros, the legendary investor best known for breaking the Bank of England, signalled the end of an era yesterday, announcing that he would no longer invest money for other people and concentrate instead on managing his multi-billion dollar personal fortune.
After nearly four decades managing money for investors, 80-year old Mr Soros will hand back about $1bn (£610m) of cash to sidestep impending regulations that would have required fuller disclosure of his flagship Quantum fund's activities to the Securities and Exchange Commission, as part of its drive for greater transparency.
Mr Soros, a Hungarian émigré who arrived in London to study at the London School of Economics after the Second World War and moved to New York in 1956 to become an arbitrage trader, will turn his investment firm into a so-called family office, meaning that it will escape the stricter requirements of the new Dodd-Frank Act.
Mr Soros, who made $1.1bn betting that the Bank of England would be forced to devalue the pound in 1992 and a further $750m betting against the Thai baht five years later, will manage about $24bn for himself, his family and his foundations.
Keith Anderson, the fund's chief investment officer, will leave as part of the group's transition to a family office, according to a letter to investors. The letter said: "We wish to express our gratitude to those who chose to invest their capital with Soros Fund Management over the last nearly 40 years. We trust that you have felt well rewarded for your decision over time."
The letter added: "An unfortunate consequence of the new circumstances is that we will no longer be able to manage assets for anyone other than a family client as defined under the regulations."
The Quantum fund is understood to have made an average annual return of about 20 per cent since it was set up in 1973, although its performance has waned amid a difficult trading environment in the past 18 months. Last year the fund's value increased by 2.5 per cent, while it lost 6 per cent in the first half of 2011.
Mr Soros is expected to invest an increasing amount of his cash in gold after forecasting in May that the precious metal would reach as much as $4,000 an ounce over the next three to five years. It is currently trading at around $1,622 an ounce.
Mr Soros, whose worth is estimated at $14.5bn by Forbes magazine, is the latest in a series of investors to close their funds to outside investors to avoid greater regulatory scrutiny. Stan Druckenmiller, Mr Soros's former chief investment officer who left in 2000 to set up Duquesne Capital Management, decided last year to close his fund to concentrate on managing his own wealth.
Carl Icahn, the activist investor, and Chris Shumway, have also closed their funds to outsiders.
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