Tudor Investment Corp Halts Withdrawals From BVI Global Fund ~ market folly

Wednesday, December 3, 2008

Tudor Investment Corp Halts Withdrawals From BVI Global Fund

Paul Tudor Jones' Tudor Investment Corp has temporarily frozen withdrawals from its $10 billion flagship BVI Global Fund. The global macro fund has found it tough to put a value on certain assets that don't really have a liquid market right now, namely corporate bonds and emerging market loans (about 29% of fund assets currently). So, in a move contemplated by many investment banks months earlier, Tudor is aiming to split his BVI Fund into two funds: The BVI Fund which will trade liquid securities such as stocks and currencies, and then the new Legacy fund which will house all the illiquid assets.

BVI Global is down 5% year-to-date. And, although Tudor is upset with his fund's performance, they are holding in there nicely, all things considered. Tudor also revealed that investors had asked to withdraw 14% of capital from the fund. This just goes to show that funds that haven't even been beaten down that bad are facing redemptions as well. People just need cash, badly.

Taken from Bloomberg,

"BVI Global, which has posted average annual returns of as much as 22 percent since inception, will focus on macro investing, a strategy that seeks to profit from broad economic trends by trading stocks, bonds and other securities.

As of Oct. 31, the fund had 62 percent of assets in macro investments, while 30 percent was in equity strategies and 8 percent was in credit, event-driven and fixed-income arbitrage trades, according to an October client letter.

The firm’s Tensor Fund Ltd., which manages about $1 billion, returned about 34 percent this year through Nov. 19, while Tudor Futures, managed by Jones, gained 21 percent, according to a person familiar with the firm."

Also worth noting is the fact that Tudor's equities focused fund, Raptor, is down 16.5% year-to-date. That fund is run by James Pallotta, who will be leaving Tudor to start his own fund.

You can read Paul Tudor Jones' recent letter to investors here.

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