Veteran European hedge fund manager Philippe Jabre is joining a growing list of hedge fund managers who are returning at least some of their client capital.
Jabre, who co-founded Geneva-based Jabre Capital Partners in 2006, is returning client money in three hedge funds he manages, firm co-founder Mark Cecil confirmed to Institutional Investor when reached by phone. The news was first reported by Bloomberg.
“The outlook for next year doesn’t look good for active fund managers,” said Cecil. “It was time for him to step back and return money. He’ll continue to manage his own money. It doesn’t affect the other funds under our umbrella.”
The firm will continue to manage client money in two other funds it operates, an emerging markets fund and a European credit fund, according to Bloomberg.
“In previous periods, weakness created opportunities but as we survey the outlook for 2019, we are concerned that we don’t see those opportunities,” wrote Jabre in a letter to investors announcing the decision. “Both the political and economic outlooks remain confused and without clear direction.”
Jabre joins a host of hedge fund firms that have returned money to investors, citing difficult market conditions, a tough fundraising environment, and in some cases, long periods of underperformance, among other reasons. This year Leon Cooperman’s Omega Advisors, Jonathon Jacobson’s Highfields Capital Management, and Alan Fournier’s Pennant Capital all converted to family offices. Jason Karp’s Tourbillon Capital Partners announced plans to close in October, following a rash of high-profile shutdowns in 2017.
Jabre Capital once managed as much as $5 billion. It had $1.2 billion under management in April and employed 40 people, according to Bloomberg.
Jabre initially shot to fame as a portfolio manager at GLG, a boutique hedge fund firm in London that was later acquired by Man Group. There, he generated outsize returns — and also paid the largest fine in the history of the UK’s market regulator at the time. Jabre paid 750,000 pounds (then $1.4 million) in 2006 to settle charges that he allegedly traded in the convertible bonds of Japanese financial services firm Sumitomo Mitsui Financial Group using improper insider information. He started Jabre Capital Partners later that year.
In the letter to investors, Jabre also pointed to computer-driven trading as another way in which trading conditions have significantly changed in the past ten years, writing, “financial markets have significantly evolved over the last decade driven by new technologies and the market itself is becoming more difficult to anticipate as traditional participants are imperceptibly replaced by computerized models.”
Jabre said he expected to return the bulk of client money in the funds by February.