Citadel Investment Group, whose flagship hedge funds sank 55% last year amid unprecedented market turmoil, will allow investors to take their money out again after shutting off withdrawals for almost a year.
Starting Nov. 30, the funds will lift suspension of redemptions from the company's Wellington and Kensington funds, according to a letter sent to investors Thursday. The funds have a combined $14 billion under management.
The change in policy marks a turnaround for the Chicago-based company, whose flagship funds have gained 57% this year. The restoration of “business as usual” to the company's core hedge funds comes as CEO Kenneth Griffin tries to remake his company into a broad financial services provider.
The letter also outlined several ways the company will reduce risk to investors shaken by last year's steep declines, by reducing reliance on leverage to buy corporate debt, avoiding investments — like that in ETrade Financial Corp. last year — that tie up a large percentage of assets in a single security, and exiting trading in some of the most complex derivatives contracts.
The changes have helped make the funds more resilient to potential market turmoil, Mr. Griffin said in the letter. If last year's events were to repeat themselves, he said, the hedge funds would lose 13% to 18%, rather than the 55% they did lose, he said. Separately, the company said Rohit D'Souza, a former Merrill Lynch & Co. executive hired a year ago to build an investment bank and brokerage, is leaving. Patrick Edsparr, who runs Citadel's European business, will take over operations of what's now a 70-person unit.
Ann Saphir is a senior reporter at Crain's Chicago Business, a sister publication of Pensions & Investments