Fund of hedge funds firm HDF wins back inflows

PARIS Wed May 6, 2009 8:28am EDT

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PARIS (Reuters) - HDF, France's oldest fund of hedge funds company, has started to win back new inflows although some clients are still looking to exit and assets under management remain below the $3 billion level at the end of last year.

Paris-based HDF, which was founded in 1986 and currently has around $2.5 billion in assets under management, hopes to raise that amount but has set no timeline, Managing Director Christophe Chouard told Reuters in an interview.

"There are inflows and some redemption orders still being paid out. We have not changed our redemption terms, we can keep our promises and we have to," he said late on Tuesday.

"Our draw-downs have been less than the industry, we have been repaying our clients. Things are stabilizing."

Chouard said HDF had avoided certain mistakes which made many of its former rivals vulnerable to the financial crisis.

"People are pleased that we have not deteriorated our liquidity terms," he said.

Another reason several funds have suffered is due to lack of transparency, he added.

"There were so many quasi private equity funds calling themselves hedge funds (such as distressed asset funds, or asset-based lending funds, which are long-only funds). We didn't invest in those kinds of funds," he said.

In March, Man Group (EMG.L), the world's largest listed hedge fund company, reported an 11 percent fall in assets and said it would cut jobs.

HDF, which has 65 employees in Paris, New York, Geneva, Singapore, Belgium and Luxemburg, also sees more opportunities and less competition as the financial crisis spurs a shake-out of the fund management sector.

Chouard said HDF had no immediate plans to make acquisitions and had increased its allocation into government bonds and fixed credit managers. It is aiming for flat net inflows this year.

"We are not taking directional bets anymore. It's a bear market, we don't want to bet that the crisis is over, not at all," he said."

(Editing by Jon Loades-Carter)

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