Hedge Fund Verition Opens to Cash for Patient Investors Only

Hedge fund Verition Fund Management has opened to new cash for the first time this year, but is pushing clients to lock in capital for longer if they want a piece of the action.

The U.S. firm is to accept money in a new share class that will allow investors to redeem just 8.33% of their assets every quarter, down from a previous 25%, according to an investor document seen by Bloomberg. That means it will take clients three years to withdraw all their money instead of one. 

The $4.2 billion money manager joins peers such as Millennium Management and Elliott Investment Management in pushing clients to invest for longer in a bid to avoid sudden withdrawals of capital and as investors’ interest in hedge fund strategies rebounds. The $4 trillion-plus industry has seen a record number of funds close to new money. 

Since starting in 2008, Verition has never had a down year. It made a record 30.4% in 2020 to beat the 9.5% average gain in hedge funds tracked by Bloomberg, and has gained about 5% so far this year.

Multi-manager investment funds such as Verition are in high demand for their approach of spreading money across a team of traders. They raised $20 billion through July, the most for any strategy, according to data from eVestment. Twenty such money pools tracked by Julius Baer Group Ltd. have grown assets by 510% over the last decade and thirteen of them are no longer taking in cash.

Sticky, long-term capital also helps Verition’s focus on niche strategies which typically have lower capacity to take in money and could take longer to succeed.      

Verition, which has 65 trading teams, was co-founded by Nicholas Maounis, the former chief investment officer of Amaranth Advisors LLC that collapsed in 2006, and Josh Goldstein, who previously was the chief operating officer of NM Holdings.

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