Highland Capital Management is shutting down two of its five hedge funds, the $1 billion Crusader Fund and the $500 million Credit Strategies Fund, according to a source familiar with the situation.
The decision followed recent painful declines for Crusader, a corporate distressed debt fund, and Credit Strategies, a multistrategy high-yield fund, and reflected in part Highland executives conclusion that hedging, funding and shorting would continue to be constrained. The funds will be unwound in an orderly manner over the coming four years, said the source, who declined to be identified.
From inception through the end of 2007, both funds had delivered annualized returns of more than 20%.
Highland spokeswoman Denise DesChenes declined to comment.