Hedge funds facing the axe

POORLY performing London-listed hedge funds face the axe in coming months as shareholders prepare to vote on whether to close them down.

Up to 11 funds, nearly half of the 28 listed, face a continuation vote as their share prices have traded at “persistently wide” discounts to net asset value, Numis analysts said yesterday.

And shareholders that received net asset value (NAV) returns of just over five per cent in 2010, compared with above ten per cent in 2009, are increasingly withdrawing capital and demanding that boards tackle discounts or wind up.

Funds have “failed to deliver” the expected capital protection and steady returns since 2008, researcher Ewan Lovett-Turner said. “We believe some investors are losing patience and are now less willing to support continuation,” he said.

Both Alternative Investment Strategies, with £250m net assets, and Cazenove Absolute Equity with £66m have triggered votes after failing to improve on 17 and 11 per cent discounts over the past year, while Saltus European Debt now trades at a 22 per cent discount.