Hedge Funds Are Struggling To Maintain Their Client Capital

What do Richard Perry's Perry Capital, John Paulson's Paulson & Co and Dan Och's Och-Ziff Capital Management hedge funds have in common? According to a Bloomberg report, they are all bleeding cash.

As noted by Bloomberg, Perry Capital's assets under management now stands at $4 billion, down from $10 billion last September. Paulson's assets under management has been on the decline since 2011 and are down 15 percent this year alone.

Och-Ziff Capital Management now manages $39.2 billion after starting 2016 managing $44.6 billion.

What Happened?

Bloomberg cited data from Hedge Fund Research Inc., which showed hedge funds have seen their largest withdrawals since the Financial Crisis. In fact, investors took back $23.3 billion of their cash in the first half of 2016. Granted, this represents less than 1 percent of the overall $2.9 trillion hedge fund industry; the three hedge funds previously mentioned are among some of the more notable names.

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Bloomberg added that the largest hedge funds "bearing the brunt of the damage" are now "retreating" from "name-branded firms" following a period of lackluster returns.

Perry, a hedge fund veteran, has never posted a losing year until 2008, but since then, he has only posted four winning years. Och-Ziff remains under investigation over charges of allegedly bribing government officials in Africa and has posted a return of just 0.4 percent in 2016.

Paulson, perhaps the most notable of the three managers, has seen mixed results since betting against the U.S. housing market in 2007, and the firm saw its assets under management decline by more than two-thirds from a peak of $38 billion five years ago.

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