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Hedge Funds

Paul Tudor Jones clients said to pull 15% from main fund

Paul Tudor Jones' investors are increasingly deserting him.

The billionaire macro manager who helped give rise to the hedge fund industry saw clients pull about 15% of assets from his main fund in the second quarter, according to investors who asked not to be identified discussing private information. That's left client assets at about $3.6 billion, almost half the value a year ago.

The withdrawals are a blow to Mr. Jones, who started Tudor Investment Corp. almost four decades ago, and exemplify the asset bleed hurting the biggest names in the business, including Alan Howard and John Paulson. As clients flee amid investment losses, Mr. Jones has taken steps to revive his firm, including reducing fees and headcount.

Mr. Jones' main BVI Global Fund is down 1.9% this year through July 21, according to a client document. Patrick Clifford, a spokesman for Tudor, declined to comment.

Macro hedge funds have posted their worst first half since 2013, losing 0.7%, and on average returned about 1% annually in the past five years, according to Hedge Fund Research Inc.

In total, Tudor Investment now has just less than $8 billion in assets, compared with $14 billion in June 2015.

As revenue declines at Tudor, Mr. Jones last month sold the firm's 43-acre Greenwich, Connecticut, headquarters' property. Tudor said it plans to move to a location in lower Fairfield County that's more convenient to New York City, where the firm has offices. It also has outposts in London and Singapore.

Tudor employees have defected along with clients. Global rates money manager Adam Grunfeld quit in May after nine years and is set to join Element Capital. Zorin Finkelsen and Dudley Hoskin left to join Balyasny Asset Management. Other departures have included risk-management chief Joanna Welsh, who departed for Ken Griffin's hedge fund Citadel last year.

Mr. Jones a year ago dismissed 15% of his employees, a rare move for the Tudor founder, who's known for his loyalty toward staff. He has told clients he will manage a larger chunk of their money and has encouraged his portfolio managers to take more risk. He has also leaned on quantitative tools to help with trading, including introducing technology that replicates the bets of his best managers.

After decades of being one of the most expensive hedge funds, Tudor has this year reduced its management fee to between 1.75% and 2.25%, while taking a 20% cut in profits. The firm had once charged management fees as high as 4% for some clients, and a performance fee of as much as 27% for others.

Like many of his peers, Mr. Jones has banked on macro making a comeback. Last year he said central bank policies, which have suppressed volatility and encouraged more government debt, will backfire and macro strategies will profit when the debt bubble bursts. So far that hasn't materialized.

Still, it's not all doom and gloom. A new event-driven fund Tudor started last year that wagers on mergers, spinoffs and other corporate changes has gained 9.3% in the first five months of the year.