Claren Road Asset Management is offering fee breaks for clients in its main $3.5 billion hedge fund who lock up their money for an additional two years or commit more capital, two people with knowledge of the matter said.
The firm, which is majority owned by Carlyle Group, will trim the management fee to 1.25% from 1.5% for those who commit to a second lockup, said the people, who asked not to be identified because the information is private. For clients who put up more cash, Claren Road is waiving its incentive fee, or slice of profits, until the fund returns to its high watermark.
Claren Road, which managed $5.3 billion at the end of February, faced its first annual loss last year since it was founded in 2005 after investments in mortgage companies Fannie Mae and Freddie Mac and energy positions stung performance. After the flagship credit fund posted its biggest monthly loss in October of 9.7%, clients asked to pull $1.9 billion from the firm.
The fee changes, which have been made over the past several months, came in response to requests from a few investors, one of the people said.
Albert Marino, Claren Road's chief operating officer, declined to comment on the changes.
Performance at the firm has improved in 2015. The main credit fund rose 1.1% this year through February, and its smaller credit opportunities fund climbed 2.7%, one of the people said.
Carlyle, the second-largest manager of alternative assets, bought a 55% stake in Claren Road in 2010.