Brevan Howard Asset Management might return about $2 billion to investors in the hedge fund firm's biggest fund to avoid growing so large that its performance suffers, said four people familiar with the matter.
The firm's Master Fund now oversees $26.9 billion, and clients have said they want the fund to remain at about $25 billion, said the people, who asked not to be identified because the company is private. Assets rose after the hedge fund produced investment gains of 11% this year through August.
Brevan Howard joins hedge funds Caxton Associates, S.A.C. Capital Management and JAT Capital Management, which have told clients in recent months that they want to limit their size because they see fewer opportunities to make money.
A spokesman for Brevan Howard confirmed the firm's plans to return some money to investors, but declined to elaborate. The Master Fund is managed by Alan Howard and a team of traders. A macro fund, it invests in liquid assets, including currencies and interest rates, to try to profit from global economic trends.
Brevan Howard could pick and choose which clients get their money back, or it could return money to investors in the fund on a pro rata basis. The firm isn't likely to make investors take withdrawals if they've shown a commitment to the hedge fund over a long period of time, such as those who haven't submitted redemption requests, said one of the people.
The fund gained 6.2% in August, its best month since February 2008. The returns came in a month when hedge funds on average declined 1.6%, the industry's worst performance since May 2010, according to data compiled by Bloomberg. It gained 1% last year, 18.7% in 2009, 20.4% in 2008 and 25.2% in 2007, according to data compiled by Bloomberg.
Caxton, a $10 billion hedge fund, told its clients last week that it will restrict the amount of money it takes in. The $14 billion S.A.C. Capital Management decided earlier this year to close its biggest fund to new clients. The fund, which opened in 1992, had remained closed for its first 13 years before reopening to investors in 2005.
JAT Capital Management, with $2.5 billion, has decided to stop marketing its fund for the time being, and won't be taking new investments beginning next month, according to two people familiar with the plans, who asked not to be identified because the information isn't public. The fund has climbed 35% this year, the people said.
