Tarchon Capital Management has decided to return capital to its funds of funds investors. The once $3 billion funds of funds business is not shutting up shop altogether, but is returning to its roots by building a macro business – as the firm did when it launched approximately 13 years ago.
Alberto Marolda, chief executive officer said: “After discussions with my colleagues and our clients, we concluded that our core business of low volatility, multi-strategy fund of hedge funds was no longer able to produce acceptable returns, given the high fee structures prevalent in the hedge fund industry, and given that the risk-free rate seems likely to remain close to zero for several more years.”
He added: “We very much regret the disruption this causes to my colleagues in our fund of funds business, but we retire from it in the knowledge that our clients have made very satisfactory returns during the life of that business.”
The firm lists four funds of funds with the InvestHedge database. The Tarchon Equity Fund was the first FoHF to launch in February 2000 and for that year the fund was up 11.76%. This year to the end of July it was up 0.3%, with 2005 being its top-performing year when it gained 16%.
The Tarchon Multi-Strategy fund, which was launched in December 2002, had peak performance in 2007 – when it was up 8.64% - and has recorded a gain of 0.79% this year to the end of July. Its twice leveraged sister launched in July 2004 and was down 0.45% for the year to date. The firm’s most recently-launched fund, Tarchon Asia, was launched in April 2010, and for that year was up 4.03%. Year to date for 2012 it was down 2.84% through July.
At its peak, Tarchon managed more than $3 billion. The new macro fund was launched earlier this year, with seed capital from a select number of Tarchon clients.