New York-based FX Concepts has taken the decision to wind down its investment management operations over the next few weeks.
FX Concepts has managed currencies for institutional investors through FX overlay and absolute return programs for the past 25 years since it was established in 1988. Over that time it has become one of the world’s foremost independent providers of foreign currency management and research.
Assets under management at the firm are believed to have dropped to levels that can no longer keep it on a sustainable business path. The Board of FX Concepts concluded that it was in the best interest of the firm’s investors to conduct an orderly wind down of open positions, close its funds, and return any remaining mandates to its clients.
Speaking with Hedgeweek, Robert Savage (pictured), Chief Strategist at FX Concepts and formerly with Goldman Sachs, says the decision was based on a pretty simple formula: performance and assets under management.
“You are only as good as the money coming in. If you’re not getting performance fees and your AuM continues to dwindle you end up in a spiral where you can never seem to get ahead of your costs, which ultimately requires taking extreme action,” says Savage.
Apparently FX Concepts’ Global Currency Program flagship fund is down 10 per cent year-to-date. It has four other funds. Savage was quoted by Reuters as saying that AuM at the beginning of the year was USD1billion and has since declined to USD621million as a result of poor performance and investor withdrawals. At its peak, in 2007, the firm’s AuM reached USD14billion making it the world’s largest FX hedge fund.
There remain, however, elements of value in the firm.
FX Concepts will maintain its daily newsletter and FX overlay advisory business and will continue to investigate its options for the future.
“We’re keeping an open mind,” says Savage.