Former Goldman Sachs prop traders struggle with hedge funds
Many would agree that working as a proprietary trader is not one and same as running a hedge fund. And yet when the Volcker Rule started taking a toll on prop units across Wall Street, people assumed that these traders would simply start hedge funds and make even more money, especially traders who worked at Goldman Sachs' vaunted Principal Strategies Group.
As it turns out, running hedge funds turned out to be anything but easy, especially in turbulent markets that vexed other funds in 2012.
Financial News reports, "Benros Capital, an event-driven hedge fund set up by two Goldman Sachs proprietary traders and backed by Brummer & Partners, Sweden's largest hedge fund manager, is closing down after Brummer decided to redeem its $300m investment…Brummer's Multi-Strategy fund decided to redeem its investment in the Benros Event Driven and Opportunistic Fund because 'the fund's performance has not met expectations,' according to a statement published yesterday on Brummer's website."
The shut-down follows the news in November that another hedge funds started by a former Goldman Sachs proprietary trader, Edoma, was shutting down amid lackluster returns.
Some may be wondering about the fate Azentus Capital, which was set up by former Goldman Sachs prop trader Morgan Sze. The fund managed $2 billion at one point. According to Reuters, the fund fell 6.8 percent in in 2011 and gained only about 1 percent in 2012.
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