Hedge fund firm Egerton shuts door to new money - sources

LONDON Thu Oct 17, 2013 4:53am EDT

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LONDON (Reuters) - Hedge fund firm Egerton Capital has closed its doors to new money, two of its investors said, after inflows and performance gains swelled its assets by 80 percent in a year.

London-based Egerton, headed by veteran stock picker John Armitage, closed its long-only fund to new investments in September, the investors said. This followed a decision to stop accepting more money into its long-short hedge fund towards the end of last year, the investors said.

Long-only funds are restricted to betting that financial instruments will rise, while long-short funds can also take bets that they will fall.

Egerton now manages $11.4 billion, with the assets almost evenly split between its equity hedge and long-only portfolios. According to a client letter at the time, it ran $6.3 billion across its funds this time last year.

Egerton declined to comment.

Its decision makes Egerton the latest in a raft of bigger hedge funds to stop taking money from new clients.

The hundreds of billions of dollars that institutional investors have pumped into the industry since the financial crisis have flowed almost exclusively to the biggest funds, prompting caution among some managers about whether they can continue to run such large amounts of money as effectively.

For investors new to the industry, it also means many of the most in-demand managers are off-limits, forcing them to put their money with smaller and lesser-known funds.

Like other equity funds, Egerton has capitalised on a boom in share prices this year amid a recovery in confidence about the world economy that has sent investors flooding back into stocks.

The firm's hedge fund has gained around 19 percent this year to October 11, against a 9 percent rise in the average equity hedge fund according to Hedge Fund Research, while the firm's long-only fund is up 25 percent.

Egerton was founded by John Armitage, who remains chief investment officer, and William Bollinger in 1994, making it one of Europe's oldest managers.

Prior to 2008 Egerton had kept its hedge fund closed to new money before it ran into losses during the financial crisis and its assets fell to around $4 billion from a previous peak of $8 billion.

The firm employs 38 people, including a team of 13 investment professionals out of an office in London's well-heeled Mayfair district, according to its website.

(Editing by Mark Potter)

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