BREVAN Howard, the hedge fund run by Alan Howard, is planning to return $2bn (£1.27bn) to investors to fulfil a deal with its clients, who want to cap the size of the firm’s flagship fund at $25bn.
The size of the fund currently stands at $26.9bn, after it made gains of 6.2 per cent last month.
A source close to the firm said investors in the Brevan Howard Master Fund have insisted for some time that the size of the vehicle be capped at $25bn, due to fears that larger funds struggle to make as large returns.
The source insisted that the decision had nothing to do with the opportunities in the market or the fund’s ability to make money.
Brevan Howard would be happy to grow the fund further, the source added, and is only returning the cash because it had promised clients it would do so.
A Brevan Howard spokesman said the firm was considering how best to return the cash to clients. The process could prove difficult, especially as some clients are likely to want to keep their cash invested in the fund.
It could either return the cash on a pro-rata basis or pick clients based on their commitment to the fund and the length of time they have been invested in it.
The Brevan Howard Master Fund, which is run by Howard and a group of traders, has outperformed the market in recent years, gaining 18.7 per cent in 2009; 20.4 per cent in 2008; and 25.2 per cent in 2007. However, it only added one per cent last year.
FAST FACTS | BREVAN HOWARD
● Brevan Howard is Europe’s second largest hedge fund, measured by assets under management
● It was founded by Alan Howard, now 48, and a group of Credit Suisse traders in 2002.