Boston - Billionaire investor George Soros, whose
stock-picking career has spanned nearly four decades, said he will manage money
only for himself as new regulations threaten to crimp the hedge fund industry
he made famous.
The octogenarian fund manager, known as much for earning
$1bn on a nervy currency bet as for giving away millions to support liberal
causes, told investors that he will return about $1bn to outside investors
and transform Soros Fund Management into a family office.
Keith Anderson, who has been Soros’ chief investment officer
since 2008, will leave the firm.
In a letter to investors, Soros’ two sons cited impending industry regulation as a reason for returning the money the fund still oversaw for outsiders, which is a relatively small percentage of the roughly $25bn Soros oversees.
Bloomberg first reported the news.
Under the new Dodd-Frank Act, hedge funds will be forced to
register with financial regulators, giving the Securities and Exchange
Commission fresh insight into exactly how these generally secretive portfolios
make money. But family offices are treated more leniently under the new
regulations.
At a time where many men of his age have retired Soros, who
will soon be 81, joins a growing list of wealthy and well-established fund
managers to reconfigure the business. Carl Icahn, another long-time fund manager,
recently also returned money to outsiders.
But there is also a growing number of younger fund managers
who are preferring to closing up shop to manage only their own money as new
regulations threaten to dramatically change the $2 trillion hedge fund
industry.
Stanley Druckenmiller, Soros’ long-time deputy who helped
engineer his winning bet against the British pound in 1992, closed up his
shop as did Chris Shumway, who was mentored by another industry great, Julian
Robertson.
While Soros’ decision to return money sounds dramatic, the
move may be more symbolic than disruptive. Soros has effectively been managing
mostly family money since reorganising the Quantum fund over a decade ago after
heavy losses.
At that time Druckenmiller split from Soros and the Quantum
fund pursued a less aggressive strategy.