Powe to wind up €330m fund

Rory Powe, one of London's best-known fund managers, is closing his flagship hedge fund after poor performance prompted investors to flee.

Powe Capital's €330m Modulus Europe is to be liquidated after a six-year winning streak ended last summer, and it lost 21 per cent this year. Since being set up in 2002 it was up 64.8 per cent.

Many other hedge funds have shut down or restructured this year in the face of investor withdrawals as the industry has produced some of its worst performance ever.

Before Mr Powe set up his hedge fund, he ran one of the country's biggest unit trusts, gaining a stellar reputation after his fund soared on the back of technology investments - but Invesco Perpetual European Growth then plunged again when it was caught out by the dot com bust.

Mr Powe said he and a team of seven - reduced from 10 - would continue running two other hedge funds, the €110m Principia Europe and the €17m Tensor Europe.

"The fund suffered because of its exposure to small and medium-sized companies and the fact that stock picking and bottom-up research and analysis has really gone unrewarded in the markets of the past year," he told the Financial Times.

He said it was hard to manage the fund in the face of big investor withdrawals, and closing was better than either limiting redemptions or cashing in the easiest to sell holdings, which would leave investors who remained with a fund "unacceptably skewed towards its least liquid names".

In a letter to investors, Mr Powe said the fund, now in the hands of liquidators, was able to return the 80 per cent it held in cash immediately and had another 20 per cent in hard-to-trade stocks which would be wound down over time, with no management fee.

He expressed "regret and sadness" but said the closure was done in the best interests of investors.