Aurora Investment Management LLC's assets under management in hedge funds of funds have declined precipitously, the victim — to some extent — of asset owners' decided preference for investing directly in hedge funds.
Aurora had assets under management of $6 billion as of Sept. 30, sources said, a drop of 22.1% in six months.
Over longer time periods, losses are more profound: As of Sept. 30, Aurora's assets had fallen 57.7% from a peak of $14.2 billion on June 30, 2008.
Roxanne M. Martino, partner and Aurora's CEO, said the Chicago-based firm's assets were $7 billion as of Aug. 31 and did not address the sources' estimate of a $1 billion slide during September.
“Industry trends are affecting us, too,” Ms. Martino said during an interview in her office, pointing to the large movement of institutions to direct hedge fund investment, consultants having become more knowledgeable and adept about hedge manager selection, and the rise of family offices with big enough asset pools to justify hiring an internal hedge fund investment officer.
Exactly why Aurora has lost so much money — performance has been adequate — is not clear, sources said.
“Aurora is in a strong position, with significant assets under management,” Ms. Martino said, noting the firm has 1,300 clients and stressing that “we started the business 28 years ago with family office and high-net-worth individuals and those clients are still with us.”
Ms. Martino would not comment on client departures, but confirmed news from industry sources that an investment consultant had changed its recommendation on Aurora and that some clients had redeemed.
“One of our long-term consultant relationships is currently recommending diversifying (hedge) funds of funds and we have been affected by this reassessment. It has been a strong, good relationship for many years. We continue to be actively engaged with the consultant,” Ms. Martino said in an e-mail response to questions while traveling outside the U.S. for business.
Ms. Martino did not identify the consultant.