Soros returns investor funds

Katherine Burton New York

George Soros, the billionaire best known for beating the Bank of England, is returning money to outside investors in his $25.5 billion (R173bn) firm, ending a career as hedge fund manager that spanned four decades.

Soros, who turns 81 next month, will hand back the less than $1bn invested by outsiders by the end of the year, according to two people briefed on the matter. Soros Fund Management would focus on managing assets solely for Soros and his family, a letter to investors said.

Keith Anderson, the chief investment officer since February 2008, was leaving, said the letter, signed by Soros’s sons Jonathan and Robert, who are co-deputy chairmen.

“We wish to express our gratitude to those who chose to invest their capital with Soros Fund Management over the last nearly 40 years,” they said.

The move completes Soros’s transformation from a speculator, who in 1992 made $1bn betting that the Bank of England would be forced to devalue the pound, to philanthropist statesman, a role he first imagined for himself as a Hungarian émigré studying at the London School of Economics after World War II, according to his writings. In the past 30 years, he has given away more than $8bn to promote democracy, foster free speech, improve education and fight poverty around the world.

Soros’s sons said they took the decision because new regulations would have made it necessary for the firm to register with the US Securities and Exchange Commission (SEC) by March 2012 if it continued to manage money for outsiders. Because the firm had overseen mostly family assets since 2000, when outside money accounted for $4bn, they decided it made sense to run it as a family office.

The rule calls for hedge funds with more than $150 million in assets to report information about their investors and employees, the assets they manage, potential conflicts of interest and their activities outside of fund advising. Registered funds will also be subject to periodic inspections by the SEC.

“We have relied until now on other exemptions from registration, which allowed outside shareholders whose interests aligned with those of the family investors to remain invested in Quantum,” the executives said, referring to its flagship Quantum Endowment Fund. “As those other exemptions are no longer available… Soros Fund Management will now complete the transition to a family office that it began 11 years ago.”

Soros, who controls $24.5bn for himself, his family and his foundations, declined to comment on the letter. Last year Stanley Druckenmiller, Soros’s chief strategist from late 1988 until 2000, closed his money management firm, Duquesne Capital Management, and created his own family office.

While Quantum made returns of about 20 percent a year, on average, since 1969, when its predecessor was started, its performance had suffered in the past 18 months, said a person familiar with the matter. In the first half of this year, Quantum lost about 6 percent, the person said, after a gain of 2.5 percent in 2010. Other macro funds have returned 5.6 percent in the past year and a half, according to Hedge Fund Research. – Bloomberg