La Francaise Is Charging Investors to Exit One of Its Funds

(Bloomberg) -- La Francaise Investment Solutions, a multibillion euro asset manager founded by ex-Societe Generale SA derivatives traders, is charging investors that wish to exit one of its funds after its value tumbled in the recent market meltdown.

Investors looking to exit the LFIS Vision Premia Opportunities Fund, a fund with just over 1 billion euros ($1.1 billion) in assets, will have to pay a ‘dilution levy’ in order to protect other shareholders, according to a filing this week. Another sub-fund will charge exiting investors to cover the cost of asset sales, a separate note said.

The fund’s net asset value tumbled almost 18% this month and its assets fell by nearly 250 million euros as a result of what LFIS officials described as “exceptional circumstances.”

“The current market environment is unprecedented, with financial parameters at historically distorted levels and liquidity severely impacted,” LFIS officials Pierre Lasserre and Laurent Marx wrote in one of the filings.

Investors will take a hit on redemptions through a process known as “swing pricing,” which is designed to protect clients continuing to invest in the fund from the cost generated in the selling of securities by those who exit.

LFIS founders Sofiene Haj Taieb and Arnaud Sarfati didn’t immediately reply to requests for comment sent through LinkedIn.

Asset management firms the world over are being whipsawed by volatile markets triggered by the spreading coronavirus. The Vision Premia Opportunities fund makes wagers in various asset classes, and invests in a number of derivatives that bet on the volatility of markets.

H2O Asset Management, majority owned by French bank Natixis SA, saw a number of bets, including volatility, sour, leading to losses of as much as 75% in some of its funds so far in 2020. Goldman Sachs Group Inc.-backed hedge fund LMR Partners closed two of its funds after bets on calmer markets deteriorated. Malachite Capital Management, founded by former Goldman traders to wager on volatility in stock prices, is winding down after the recent market turmoil.

LFIS was founded in 2013 by Haj Taieb and Sarfati, who previously held senior positions at Paris-based Societe Generale’s markets unit. The firm’s assets under management soared to 12 billion euros at the end of last year, according to its website. It is linked to La Francaise Group, an investment firm itself controlled by French lender Credit Mutuel Nord Europe.

©2020 Bloomberg L.P.

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