Citadel Investment Group, hedge-fund firm, told investors in two of its biggest funds that they will soon be able to redeem some of their money periodically, if certain benchmarks are met. Citadel, like many of its peers, suspended redemptions last year – a practice called “gating” – when clients pulled a run on the funds due to weak performance.
But things have started to turn around, as hedge funds overall made modest gains in both December and January.
In light of better market liquidity and a stronger balance sheet, Citadel, which manages about $16 billion in assets, told investors in its Wellington and Kensington funds that they would be allowed to redeem some of their cash at the end of each quarter, depending on capital levels. But CEO Kenneth Griffin told investors in a letter distributed on Friday that the situation is not repaired enough to completely lift gates.
“Given that the world’s financial system has seen only modest improvement since year-end, we believe that it is necessary to continue to suspend redemptions,” Griffin wrote, according to reports. Citadel spokeswoman Katie Spring confirmed the news.
Griffin also says Citadel has “significantly reduced” its holdings of illiquid assets to shore up its balance sheet and meet investor demands.
D.C.