Davidson Kempner Shutting Down Flagship Distressed Fund
https://www.reuters.com/business/finance/hedge-fu…
Another traditional distressed HF capital pool bites the dust. YTD returns of ~5% is lagging the HY and leveraged loan index pretty heavily, not to mention the CCC indices which are a much better benchmark and seems like annual returns over the past decade were ~5% so not too surprising that this is shutting down.
Still feels like a big deal given the reputation DK had in the space.
What kind of distressed fund is it ?
Given how little DK actually trades around positions, not that surprising. Their investing style is more suited for drawdown funds tbh which are also staying around.
DOF was relatively tiny compared to their AUM now and did outperform HY / CCC indices for most of last several years. Think outperformance under evergreen HF structure just wasn’t high enough relative to other products / what they can achieve from drawdown hence why they’re shutting it.
makes sense, buy and hold distressed is no longer viable for the evergreen fund structure; you just have to turn capital a lot faster nowadays
Do you mind expanding on this?
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