Blackstone to close multi-strategy fund after assets drop nearly 90%

By Nell Mackenzie and Anirudh Saligrama

(Reuters) -Blackstone plans to close a fund that exposes investors to a variety of hedge funds and trading strategies after assets fell almost 90% in four years, the company told Reuters on Tuesday.

The story first appeared in the Financial Times.

The U.S.-based asset manager said it had informed clients after it decided in October that its Blackstone Diversified Multi-Strategy fund would close at the end of the year.

The fund, which represents a 0.5% portion of Blackstone’s hedge fund operation, reported a 2% decline in returns from the beginning of 2020 until the end of last month, the company confirmed.

“This is a small, legacy fund of around $200 million,” a Blackstone spokesperson said in an emailed statement. The statement said that since hiring new leadership in 2021, Blackstone’s fund had outperformed an average global stock and bond portfolio, returning 4.5% to investors, compared with a loss of 4.6% on an average so-called 60/40 portfolio.

“We are in talks with clients to move their capital to newer strategies that offer greater flexibility than the current structure allows,” Blackstone said.

Assets under management in the fund peaked at 1.7 billion pounds ($2.12 billion) during the last quarter of 2019. But that had dropped to 190 million pounds, according to the latest fund holdings provided by Kepler Absolute Hedge.

The fund employs a European legal structure called Ucits – Undertakings for Collective Investment in Transferable Securities – which allows retail investors access, but also restricts the amount of risk the fund can undertake.

($1 = 0.8025 pounds)

(Reporting by Nell Mackenzie and Anirudh Saligrama in Bengaluru; editing by Jason Neely, Kirsten Donovan)