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By NOELLE KNOX
AP Business Writer
NEW YORK (AP) via NewsEdge Corporation -
The top two managers at Soros Fund
Management, a $14 billion hedge fund company,
are leaving in the wake of double-digit declining
performance this year.
The departures of Stan Druckenmiller, portfolio
manager of the Quantum Fund, and Nick Roditi,
54, portfolio manager of the Quota Fund, puts
the future of Soros' hedge fund empire up in the
air.
``Hedge funds are, in many cases, very much
one-man shows,'' said Meredith Jones, vice
president and director of research for Van Hedge
Fund Advisors International Inc. She added,
``They are big shoes to fill. There are not many
people in the industry who have the name
recognition that Druckenmiller and Roditi did.''
George Soros, 69, a renowned investor and
philanthropist, said Friday in a letter to investors
that he will convert the Quantum Fund to a
``lower risk/lower reward operation'' and rename
it the Quantum Endowment Fund. He did not
name a successor to Druckenmiller, who is taking
a sabbatical after 12 years with the company.
The Quantum Fund, which has assets of $8.24
billion, is down 22 percent this year, scarring an
otherwise stellar record of returning an average
of 30 percent a year.
The Quota Fund, which has $1.27 billion in
assets, is down 32 percent this year. Soros said
he plans to transfer the management of the
assets to another outside advisor.
News of the shakeup at Soros Fund Management
comes less than a month after Julian Robertson
said he would liquidate Tiger Management, a
hedge fund with $6 billion in assets.
Both hedge funds have been victims of their own
success. Their eye-popping performance
attracted huge sums of money, which became
harder and harder to invest deftly.
``We have come to realize that a large hedge
fund like Quantum Fund is no longer the best
way to manage money,'' Soros wrote in his letter
to investors, adding, ``Quantum Fund is far too
big and its activities too closely watched by the
market to be able to operate successfully in this
environment.''
Hedge funds are investment funds that are
incorporated overseas and cater to
multimillionaires, universities, endowments and
the like. Hedge funds, which are largely
unregulated, can make riskier investments than
mutual funds. For example, hedge funds often
borrow huge sums of money to pour into stocks,
bonds, currencies and commodities.
Jones, the hedge fund advisor, said she didn't
think the problems of Tiger and Soros would
have lasting repercussions on the industry.
Most hedge funds have less than $1 billion in
assets, she said, and don't face the same
challenges.
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