Boston hedge fund Highfields Capital Management is returning billions in client money and converting into a family office, founder Jonathan Jacobson told investors in a letter Wednesday.
The decision to return money to investors would mark one of the largest hedge fund closings in recent history. Jacobson started the $12.1 billion stock-trading firm in 1998 after he left his post trading stocks for Harvard University’s endowment. Harvard was Highfields’ first client. About $9.5 billion of Highfields’ assets are outside client money.
“Done correctly, money management is an all-consuming, 24/7 pursuit… After three-and-a-half decades of sitting in front of a screen, I realized I am ready for a change,” Jacobson, 57, wrote in the letter. “The tell was that I simply could not pull the trigger on making a multi-year commitment to a few potential key hires.”
Jacobson’s decision to return money, which he described as “beyond incredibly difficult,” is the latest closure by a high-profile manager during a tough period for hedge funds. This year through August, stock hedge funds on average returned 2.3% compared with a 10% return for the S&P 500 SPX, +0.07% , including dividends, according to industry research firm HFR. Some firms have lowered their relatively high fees, while other have closed their doors and returned client money.