GSA Capital, one of London’s best-known hedge funds will soon become a private trading firm with a focus on better strategies. It will return capital to its investors and search for higher returns.
The Mayfair-based group manages about $2.6bn in assets and said in a statement that it will soon shut down its $750m Trend fund and return the money to investors.
Clients that have invested in its other three funds will be able to keep their money in the firm, but it will no longer accept new assets, and will shut down its sales team.
GSA isn’t following an unfamiliar path in the hedge fund industry because of waning investor interests in certain strategies, as well as investors that are too demanding and risk averse that push managers to focus on internal capital.
In 2015, Mike Platt turned hedge fund BlueCrest into a family office, which helped him take up different positions and aided BlueCrest with huge profits. Louis Bacon’s Moore Capital also told its investors that it was closing its flagship funds to external capital in 2019. Louis’s challenging business model was able to take more risks in 2020, and made more than 70 percent profit, one of the biggest profits of his career.
Someone close to GSA commented that the fund wanted to “focus on returns rather than seeking outside capital,” and that the company didn’t want to be a “sleepy family office”, but a “trading beast”. The person also added that becoming a private trading firm would also also allow GSA to indulge in high-risk and high-return strategies.
While GSA’s main funds experienced a period of gains, its Trends fund didn’t perform as well. While its assets peaked at $4.5bn, it also waned in recent years.
“A permanent capital base will allow GSA to make long-term investments into [research and development], talent acquisition and retention. GSA also plans to invest a significant fraction of its profits back into the business,” said the firm in a statement.
