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Blackstone (BX) Decides to Wind Down Its Multi-Strategy Fund
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Blackstone Inc. (BX - Free Report) will wind down the Blackstone Diversified Multi-Strategy fund — a fund that offers investors exposure to a range of hedge funds and other trading strategies — by the end of this year. The news was first reported by The Financial Times.
BX informed its clients about the closing of the fund after assets in the fund fell almost 90% from £1.7 billion in December 2019 to £192 million at the end of October 2023.
Moreover, BX confirmed that the fund, representing only 0.5% of Blackstone’s hedge fund solutions business, reported a 2% decline in returns from the beginning of 2020 until the end of October 2023.
BX stated, “This is a small, legacy fund. We are in talks with clients to move their capital to newer strategies that offer greater flexibility than the current structure allows.”
BX’s Diversified Multi-Strategy fund employs a European legal structure called Ucits that allows retail investors easy access to assets but restricts the amount of risk that the fund can undertake.
Thus, returns on such Ucits funds can be dull because of the constraints of regulations that govern the funds.
For example, direct short selling, which is used regularly by hedge funds, is banned, and there are limits on leverage and the amount of illiquid assets held by funds.
Notably, the BX fund invests with managers like Two Sigma, one of the world’s biggest quantitative hedge fund firms, Bayview and London-based emerging markets manager Emso.
Such a Ucits fund is part of an effort made by managers to capitalize on the success of giant hedge funds such as Citadel and Millennium, which employ traders across a wide range of strategies and have been among the largest winners during the pandemic.
Notably, Citadel made a record $16 billion profit for investors last year, becoming the most successful hedge fund firm of all time.
However, the asset reduction in the BX fund reflects broader challenges within the industry, such as heavy investor outflows. According to Sussex Partners, multi-strategy Ucits funds are facing tough times. Total assets in the multi-strategy mutual funds, regulated by Ucits, have declined 30% over the past year.
The winding down of the BX fund represents a withdrawal from a segment that has been struggling to keep pace with the broader hedge fund market gains.
Over the past six months, shares of BX have gained 26.3% compared with the industry’s 5.5% rally.
Image Source: Zacks Investment Research
Currently, BX carries a Zacks Rank #3 (Hold).
A couple of better-ranked stocks from the finance space are Prospect Capital Corporation (PSEC - Free Report) and First Citizens BancShares, Inc. (FCNCA - Free Report) .
Earnings estimates for PSEC have been revised 8.1% upward for the current fiscal year over the past 60 days. The company’s share price has decreased 5.1% over the past three months. PSEC currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
First Citizens BancShares currently carries a Zacks Rank #2 (Buy). Its earnings estimates have been revised upward by 3.9% for the current year over the past 60 days. In the last three months, FCNCA’s share price has increased 4.4%.
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Blackstone (BX) Decides to Wind Down Its Multi-Strategy Fund
Blackstone Inc. (BX - Free Report) will wind down the Blackstone Diversified Multi-Strategy fund — a fund that offers investors exposure to a range of hedge funds and other trading strategies — by the end of this year. The news was first reported by The Financial Times.
BX informed its clients about the closing of the fund after assets in the fund fell almost 90% from £1.7 billion in December 2019 to £192 million at the end of October 2023.
Moreover, BX confirmed that the fund, representing only 0.5% of Blackstone’s hedge fund solutions business, reported a 2% decline in returns from the beginning of 2020 until the end of October 2023.
BX stated, “This is a small, legacy fund. We are in talks with clients to move their capital to newer strategies that offer greater flexibility than the current structure allows.”
BX’s Diversified Multi-Strategy fund employs a European legal structure called Ucits that allows retail investors easy access to assets but restricts the amount of risk that the fund can undertake.
Thus, returns on such Ucits funds can be dull because of the constraints of regulations that govern the funds.
For example, direct short selling, which is used regularly by hedge funds, is banned, and there are limits on leverage and the amount of illiquid assets held by funds.
Notably, the BX fund invests with managers like Two Sigma, one of the world’s biggest quantitative hedge fund firms, Bayview and London-based emerging markets manager Emso.
Such a Ucits fund is part of an effort made by managers to capitalize on the success of giant hedge funds such as Citadel and Millennium, which employ traders across a wide range of strategies and have been among the largest winners during the pandemic.
Notably, Citadel made a record $16 billion profit for investors last year, becoming the most successful hedge fund firm of all time.
However, the asset reduction in the BX fund reflects broader challenges within the industry, such as heavy investor outflows. According to Sussex Partners, multi-strategy Ucits funds are facing tough times. Total assets in the multi-strategy mutual funds, regulated by Ucits, have declined 30% over the past year.
The winding down of the BX fund represents a withdrawal from a segment that has been struggling to keep pace with the broader hedge fund market gains.
Over the past six months, shares of BX have gained 26.3% compared with the industry’s 5.5% rally.
Image Source: Zacks Investment Research
Currently, BX carries a Zacks Rank #3 (Hold).
A couple of better-ranked stocks from the finance space are Prospect Capital Corporation (PSEC - Free Report) and First Citizens BancShares, Inc. (FCNCA - Free Report) .
Earnings estimates for PSEC have been revised 8.1% upward for the current fiscal year over the past 60 days. The company’s share price has decreased 5.1% over the past three months. PSEC currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
First Citizens BancShares currently carries a Zacks Rank #2 (Buy). Its earnings estimates have been revised upward by 3.9% for the current year over the past 60 days. In the last three months, FCNCA’s share price has increased 4.4%.