Och-Ziff Capital Management Group’s bet on outsider Robert Shafir appears to be paying off.
After announcing that Shafir would take over from founder Dan Och as chief executive at the end of January, the hedge fund firm went on to finish the quarter with net inflows, according to an earnings statement released on Wednesday. It was the first three-month period with more capital committed to Och-Ziff funds than was redeemed since 2015.
“Between our performance, what looks like industry demand, and the passage of time, we feel like we are restoring the confidence of our clients,” Shafir said during an earnings call with investors Wednesday.
Och-Ziff reported net flows of about $381 million for the three months ending on March 31. Although the hedge fund firm’s flagship multi-strategy funds continued to bleed capital, with net outflows of almost $552 million, its institutional credit strategies attracted more than $1 billion from investors on a net basis.
The firm attributed the growth within its institutional credit business, which invests in high-yield bonds, loans and private debt, to new collateralized loan obligations closed during the quarter. CLOs buy leveraged loans, a form of high-yield corporate debt that's typically rated below investment-grade. Meanwhile, Och-Ziff’s opportunistic credit funds had about $99 million in net redemptions during the three-month period.
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On the conference call, Shafir expressed confidence that multi-strategy funds would soon begin growing again, in part due to current market conditions, which he said are spurring investor interest in multi-strategy products.
“It feels like we are in the process of really bottoming out in terms of the outflows in those product areas,” he said.
As of May 1, the firm estimated its assets under management rose to $32.7 billion, as a result of inflows and positive performance to start the year.
For instance, Och Ziff’s main multi-strategy fund, the Oz Master Fund, was up 2.1 percent net-of-fees during the first quarter. The Oz Credit Opportunities Master Fund, meanwhile, earned net returns of 2.8 percent.