Maple Leaf Capital, an $800m (£552m) London hedge fund manager, has offered to cut its fees if its investors support a restructuring, after dropping plans for long lock-ups.
Maple Leaf, set up by two former Credit Suisse traders, abandoned efforts before Christmas to persuade investors to vote for one or two-year lock-ups on its fund, Maple Leaf Macro Volatility. The fund has about a quarter of its money in hard-to-trade assets, and wants to block the same amount of withdrawals until they can be sold.
The move comes as hedge fund investors have become increasingly wary of locking up their holdings for long periods in the face of widespread restrictions by funds on access to cash.
More than 200 funds have blocked or limited withdrawals, forcing investors to raise cash from the better-performing funds they wanted to keep.
“The whole industry’s being hit with the same issues,” said Michael Wexler, Maple Leaf chief investment officer.
Maple Leaf’s plan, presented yesterday, allows monthly withdrawals and offers to cut fees to 1.5 per cent a year, from the industry-standard 2 per cent, according to a letter to investors. A 20 per cent performance fee would remain, charged on profits once losses have been recovered.
The hard-to-trade assets – mostly convertible bonds and private issues – would be put into a new vehicle, on which withdrawals would not be allowed until the assets had been sold.
Mr Wexler said he expected all, or almost all, investors to support the revised plan.
“We wanted to have a proposal that has broad unanimous consensus,” he said.
Maple Leaf, set up in 2002, posted a 21 per cent gain in 2007 but fell 9.5 per cent last year – although that is better than the industry average of a fall of 18 per cent.
Some other hedge funds have moved to ease redemption terms in an effort to attract investors, while many are being forced to lower fees to hang on to clients.
“Hedge funds have been in a situation of massive over-demand for their services and able to charge what they like,” said one large investor in the industry. “That will change and is changing.”