Timing is everything, and it seems Robert Merton could not beat the clock signaling that the market for credit hedge funds had hit its saturation point. Merton, a Nobel laureate in economics forever linked with collapsed hedge fund Long Term Capital Management as its co-founder, has shuttered his firm’s newest fund after just three months. The problem for his Integrated Finance’s IFL Continuum Fund, according to Tim Jackson of Rocaton Investment Advisors in a Bloomberg News interview, is that the past 18 months have seen a glut of credit-type hedge funds. “By this year,” Jackson says, “ a lot of people had already made allocations,” to such firms as GSO Capital Partners with $2 billion AUM and Camulos Capital with $800 million, founded by Bennett Goodman of Credit Suisse First Boston and Richard Brennan of Soros Fund Management, respectively. And so since March Merton’s offering mustered a mere $30 million. The failed fund was managed by Peter Hancock of JPMorgan Chase, who together with Merton and another JPMorgan vet, Roberto Mendoza, founded Integrated in late 2002.
