CORRECTED-QFS shuts down its last fund, cites tough conditions

Wed Jan 15, 2014 2:43pm EST

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(Clarifies in headline and story that QFS is shutting down its sole remaining fund, and not QFS itself)

BOSTON Jan 14 (Reuters) - QFS Asset Management, which used a quantitative approach to global macro investing during 26 years in the business, said on Tuesday that it is shutting down its last remaining fund, citing difficult market conditions.

The Greenwich, Connecticut-based firm, founded by economist Sandy Grossman, said in news release on Tuesday that it will return nearly $1 billion to clients by the end of the month. It added that QFS will continue its market research efforts and seek to develop new sources of returns.

"The current market environment does not offer adequate risk adjusted opportunities for fundamentally-driven quant macro strategies, and that is unlikely to change for the foreseeable future," QFS Chief Executive Officer Karlheinz Muhr said in a statement. Muhr joined the firm as part of a merger in 2011.

The QFS fund becomes one of the new year's first hedge fund industry casualties after a difficult 2013 marked by generally lackluster returns. The Hedge Fund Research Inc's Macro index dipped 0.3 percent last year, making for a third consecutive year of declines. Macro funds bet on interest rate movements, currencies, and broad economic trends.

At its heyday just before the financial crisis, QFS oversaw $3.6 billion in assets. Assets have shrunk despite some strong returns, people familiar with the fund said.

QFS isn't alone in complaining about uncertain economic conditions and what managers perceive as a more difficult investing environment.

A number of large hedge funds, including Seth Klarman's Baupost Group and Daniel Loeb's Third Point, have given back some money to clients last year to guard against becoming too large and running out of investment ideas. (Reporting by Svea Herbst-Bayliss; Editing by Nick Zieminski)

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