LONDON London-based Nevsky Capital's founders have decided to shut down their $1.5 billion hedge fund and retire, saying weak market conditions made it unlikely they could generate the returns they had in the past.
Martin Taylor, 46, one of the firm's co-founders, told Reuters that Nevsky Capital was returning money to investors due to concerns about the maturing of the U.S. business cycle and the fund's ability to make money in such an environment.
Taylor is retiring after 21 years in the funds industry, while fellow founder Nick Barnes, 41, is leaving the market after 18 years.
The fund, which buys and sells stocks in emerging and developed markets from an office in London's Mayfair district, has returned 18.4 percent annually net of fees since it launched in 2000. The average fund has returned 2.5 percent over the same period, according to data from industry tracker HFR.
Nevsky Fund Plc returned 0.4 percent in 2015, Taylor told Reuters, against an average return for all equity funds over the year of minus 2.16 percent, HFR data showed.
The closure follows the December decision by $8 billion BlueCrest Capital Management to return investor money and the closure of $900 million credit hedge fund Lucidus.
"The reason we have decided to shut down is that markets have become progressively difficult and less liquid and because we are concerned about the growing age of the U.S. business cycle," Taylor told Reuters.
One hedge fund investor, who declined to be named, said: "Martin Taylor is a great manager who has performed excellently really. He has decided that it is just too tough to make money based on fundamental research today, so he will step out for at least a few years."
"I would not be surprised to see other equity hedge managers do the same thing in the coming six months," the investor added.
Taylor and Barnes launched Nevsky Capital in 2000, alongside Rory Landman, who left the business in 2005 and is now senior bursar at Trinity College, Cambridge.
Nevsky Capital started with a $21 million Cayman-based fund. The present fund was relaunched in 2010 as an Ireland-based fund with $800 million.
"We think we should walk away from the pitch with our legs intact rather than play on and risk having them broken in a bad tackle we didn't see coming," Taylor, a keen West Ham United soccer fan, told Reuters.
(Reporting by Maiya Keidan; Editing by Alexander Smith)