Poor hedge fund managers are going to need to ease up on the construction of their mega mansions, if this keeps up.
AIG has had enough and won’t take the losses anymore. They’re pulling $5.5 billion or so from their hedge fund investments, rightfully so.
AIG had about $11 billion dedicated to hedge funds as of the third quarter, and returns on the holdings have slumped in recent months. Chief Executive Officer Peter Hancock said at a Jan. 26 investor presentation that the company intends to lower the allocation, but he didn’t say how many hedge fund managers the company would stick with or provide details on the planned amount of exits.
“We had a very negative experience in hedge funds,” Hancock said in the presentation. Shifting the allocations will “lead to a much better return on risk and especially return on capital.”
The company has investments in 100 funds. They’re selling in order to preparing for increased volatility and want to reduce “risk assets” in financial markets, as a period of limited liquidity might be around the bend.If you enjoy the content at iBankCoin, please follow us on Twitter