Chidem Kurdas
Competition for capital is intense among the few large funds of funds managers left standing after the shakeout in 2008-2009.
Sounds like Blackstone Group’s hedge fund investment division is the most successful in attracting big clients. Company chief executive Stephen Schwarzman says their share of hedge fund flows is going up; they had a net inflow of $2.5 billion in the first half of the year.
Even so, that part of Blackstone is below its 2008 assets. At peak they had around $55 billion, whereas the most recent figure is about $43 billion (out of a total of $190 billion including real estate and private equity). But compared to just about any other fund of funds manager, Blackstone is ahead.
Permal makes for an interesting contrast because it is in some ways similar. Like Blackstone, Permal had not invested with Bernard Madoff and hence did not suffer the loss of reputation that has plagued fund of funds since the Madoff scandal. Both Blackstone and Permal are well regarded by investors. Permal also is part of a larger entity—giant asset manager Legg Mason, which has substantial marketing and other capabilities that Permal can use.
Despite the advantages, Permal has had an uphill battle. Assets were at $17.3 billion a few months ago, way down from the $35 billion pre-crisis. A while back I asked whether Permal and Legg Mason can buck the downward trend in funds of funds. They are still working on it.
Permal is pitching new funds. Chief executive Isaac Souede continues to favor credit strategies over equities, investing for instance in Paulson Credit Opportunities—which unlike other John Paulson funds has done well this year.
Tags: Bernard Madoff, Isaac Souede, John Paulson, Legg Mason, Stephen Schwarzman
HedgeFundSmarts 
July 17, 2013 at 4:07 pm
[…] funds of funds, until recently losing clients and apparently moribund with a few exceptions, are getting new […]