NEW YORK/BOSTON, Nov 20 (Reuters) - Anand Parekh, a former head equity trader at Citadel Investment Group, is setting up his own hedge fund, a source familiar with the matter said.
Parekh has raised $1.5 billion from Deutsche Bank, DBKGn.DE and plans to seek additional funds, the source said. Parekh headed North American structuring for credit and interest-rate products at Deutsche Bank before joining hedge fund Citadel in 2003.
Parekh could not be reached for comment.
Parekh’s new firm, which will pursue multiple strategies covering several asset classes, will be based in Chicago.
Parekh is the latest in a string of well-known managers to set up his own fund, but investors in the $2 trillion hedge fund industry say getting started is harder than it used to be.
“Starting your own fund used to be easier. Even if you were a mediocre manager at a well-respected mutual fund company you could do it. But it that is not the case any more. It is more difficult to attract money now,” said Lawrence Glazer, who invests in hedge funds as managing partner at Mayflower Advisors.
One reason is that large investors such as pension funds, which are quickly adding hedgE funds to their portfolios, are demanding to see longer track records and are negotiating to get their money out fast in case of trouble.
Many large investors want to know exactly how hedge funds plan to make money, and are no longer willing to sign over a big check and hope they will get more back later.
When Parekh left Citadel his group had posted below-average returns for Citadel, people who were familiar with the matter said. But he had performed well the prior year, a person who knows him said.
A spokesman for Deutsche Bank was not immediately available for comment. (Reporting by Dan Wilchins and Svea Herbst-Bayliss, editing by Steve Orlofsky)
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