Sculptor Hedge Fund Hit by $42 Million of Third-Quarter Outflows

(Bloomberg) -- Sculptor Capital Management’s flagship hedge fund recorded $42 million of outflows in the third quarter, even as the fund gained 7.4% through the first nine months of the year. 

The hedge fund assets totaled $11.5 billion as of Sept. 30, Sculptor said Wednesday in a statement. Despite the latest client withdrawals, the multistrategy vehicle and associated portfolios pulled in about $155 million on a net basis so far in 2021, setting it up for its first year of inflows since 2014. 

“We measure our success in growing an enduring investment business over a period of years,” the New York-based company, formally known as Och-Ziff, said in the statement. “We do not strive for, or expect, a straight line up in terms of asset growth.” 

The hedge fund experienced a prolonged client exodus that resulted in $30 billion of redemptions since 2014, when the firm disclosed that it was the target of a bribery probe into its business in Africa. It has since resolved the legal issues, paying hundreds of millions of dollars in fines and penalties as part of a deferred prosecution agreement with the U.S. and guilty plea by the Africa unit. 

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The hedge fund gained an additional 1.8% in October, boosting its year-to-date advance to 9.3%, in line with its historical average, according to the statement.

Sculptor’s Institutional Credit Strategies, which manages collateralized loan obligations, continued to be the biggest draw for clients in the third quarter, with inflows of $446 million. That unit now manages $15.1 billion of the firm’s $37.5 billion of total assets at the end of the period. 

Opportunistic Credit Funds had outflows of $66 million, with assets totaling $6.53 billion at the end of September.

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