abrdn has closed its Global Risk Mitigation Fund, citing poor returns and lack of investor interest. The hedge fund, which had struggled with negative performance since its inception, officially ceased operations on 30 August, according to a report by the Financial Standard.
In a statement, abrdn explained that shifting demand had led to a shrinking fund size, with little expectation of growth. “The fund size has become smaller over time, and we do not expect it to grow in size in the foreseeable future,” the company said.
Launched on 6 October, 2021, the fund was designed to generate positive returns during periods of market volatility, particularly when developed market equities experienced significant declines. Its strategy involved a combination of diversified hedging tactics aimed at increasing returns as equity markets fell.
However, the fund failed to meet expectations, delivering an annualised return of -10.5% since inception and -12% over the past year.
The fund’s investment exposure was primarily through a total return swap provided by BNP Paribas, offering synthetic exposure to the ASI Global Risk Mitigation 3x Index. It also occasionally used derivative instruments.
In a communication to investors, abrdn said, “We have determined that terminating the fund is appropriate and in the best interests of the unitholders to avoid the potentially high costs and inefficiencies associated with managing a small fund from an investment and operational standpoint.”
As of 31 July, the fund managed just $2.65m in assets and charged a 1.29% management fee.
