Investors Withdraw from Europe

Chidem Kurdas

Hedge fund clients, including large institutions, have been paring down their holdings in Europe. This appears to be a response not only to the ongoing crisis centered on Greece’s inability to pay back its debt but also to the weakness of European economies.

One specialist vehicle that shows evidence of the flight is the Och-Ziff Europe fund. It lost 4.9% in 2011—not a bad record, considering the extreme market movements due to the crisis. But the fund’s assets shrank by 23%.

By contrast, the main Och-Ziff fund’s assets increased slightly despite a small loss. Overall, the firm’s assets under management grew to $28.8 billion in 2011 from $27.9 billion a year ago, with a net capital inflow of $1.1 billion partially offset by investment losses.

In short, the Europe fund had a large outflow while most Och-Ziff portfolios did not. The other strategy where Och-Ziff had substantial withdrawal is special investments.

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