Money Flying Away From US Hedge Fund Manager

Stephen Harris

15 July 2005

Steep losses and redemptions have reduced funds managed by Vega Asset Management by $700 million in June, reducing assets under management from $7.4 billion to $6.7 billion according to information released to shareholders. The company was once one of the world’s largest hedge fund managers. All Vega's funds lost money in June, following on from losses in many of its funds in April and May. In a letter to investors, Vega’s chief executive Jonathan Berg said the losses were "unprecedented in the more than eight and a half years since we launched the first fund." Vega has seen a steady reduction in assets from a peak of $10.4 billion at the end of July 2004. Commentators say that investors are now quick to pull money out of hedge funds at the first sign of trouble. A prime example of this is London-based Bailey Coates Asset Management, which saw assets rise from $400 million to $1.3 billion in 2004 and then flow out just as quickly as losses in early 2005 exceeded 20 per cent. Bailey Coates closed its doors at the end of June and returned the remaining funds of about $500 million to investors.