Whitebox Advisors says it intends to liquidate its mutual funds next month following a slew of redemptions and losses this year. A spokesperson for the investment firm said that with so many people asking for their money back, the concentration risks to investors had become too high.
The three mutual funds that are closing are:
· Whitebox Tactical Opportunities Fund, which oversees $112.8M
· Whitebox Market Neutral Equity Fund, which oversees $40.25M
· Whitebox Tactical Advantage Fund, which oversees 20.3M
The news comes just weeks after Third Avenue Management shook up the equity and credit markets when it announced that it was liquidating its Focused Credit Fund (TFCVX), which is a $788.5M corporate debt mutual fund, but that distributions to investors would be delayed so as to prevent even bigger losses. Stone Lion Capital Partners has also suspended redemptions in its $400M of credit hedge funds following many redemption requests.
Meantime, Lucidus Capital Partners said it was liquidating all of its portfolio and would give back $900M to clients in January. The high-yield credit fund was founded six years ago by Caxton Associates. It was a redemption notice from a key investor that spurred the decision to liquidate. The fund was challenged by reduced trading volume in indexes and credit default swaps following the financial crisis.
There is growing concern that other investments may soon follow in Third Avenue Focused Credit Fund’s footsteps, especially credit funds with high exposure to junk bonds. Unfortunately, many investors don’t even realize just how at risk their money is when they become involved in certain securities. One reason for this is that many investments are misrepresented when sold to them in terms of the degree of risks involved.
Please contact our securities fraud law firm to request your free case consultation.
Whitebox Advisors will liquidate mutual funds, Business Journal, December 29, 2015
Lucidus Capital Liquidates $900 Million in Credit Funds, Yahoo, December 14, 2015