Billionaire George Soros is returning all outside investors’ money from his $25.5 billion firm to focus on managing assets solely for himself and his family.
Mr. Soros will hand back less than $1 billion by the end of the year, according to two people briefed on the matter. Keith Anderson, chief investment officer since February 2008, is leaving, according to a letter to investors signed by Mr. Soros’ sons Jonathan and Robert, co-deputy chairmen.
“We wish to express our gratitude to those who chose to invest their capital with Soros Fund Management over the last nearly 40 years,” they wrote in the letter. “We trust that you have felt well rewarded for your decision over time.”
Mr. Soros’ sons said they made the decision because new financial regulations would have made it necessary for the firm to register with the SEC by March 2012 if it continued to manage money for outsiders. Because the firm has overseen mostly family assets since 2000, when outside money accounted for about $4 billion, they decided it made more sense to run it as a family office, according to the letter.
“We have relied until now on other exemptions from registration which allowed outside shareholders whose interests aligned with those of the family investors to remain invested in Quantum,” the executives said in the letter, referring to the firm’s flagship Quantum Endowment Fund. “As those other exemptions are no longer available under the new regulations, Soros Fund Management will now complete the transition to a family office that it began 11 years ago.”
Mr. Soros, who controls more than $24.5 billion for himself, his family and his foundations, declined to comment.
While Quantum has returned about 20% a year, on average, since 1969, when its predecessor was started, according to a person familiar with the firm, the fund’s performance has suffered in the past 18 months. In the first half of this year, Quantum lost about 6%, the person said, following a gain of 2.5% in 2010. Other macro funds have returned 5.6% in the past 18 months, according to Hedge Fund Research.
Mr. Soros opened his first foundation, the Open Society Fund, in 1979, when his fund had reached about $100 million and his personal wealth had climbed to about $25 million. His initial focus was on promoting democracy and a market economy in Eastern Europe. Mr. Soros now funds a network of foundations that operate in 70 countries around the globe.