GoldenTree Asset Management will no longer manage long-only high-yield separate accounts and will return $1.2 billion to its institutional clients, said Leon Wagner, chairman. The mix of clients for the long-only strategy is about 50% U.S. investors and 50% foreign-domiciled clients.
Given the current market environment of high bond prices, low yields and rising interest rates, the firm needs to be able to go short and use leverage to "give us a fuller arsenal of weapons" to find returns, said Steve Tananbaum, president and head of investments. In addition to investment constraints, the separate accounts were too time-consuming for portfolio managers, Mr. Wagner said. The firm will continue to manage pooled fund vehicles like hedge funds and structured product funds.