George Soros, whose stock-picking career has spanned nearly four decades, said he will manage money only for himself and his family as new regulations threaten to crimp the hedge fund industry he made famous.
The octogenarian fund manager, known as much for earning $1 billion on a nervy currency bet as for giving away millions to support liberal causes, will return roughly $1 billion to outside investors most likely by the end of the year and turn Soros Fund Management into a family office. The sum represents only a small portion of the $25 billion he oversees.
Keith Anderson, who has been Soros' chief investment officer since 2008, will leave the firm.
Since launching the Quantum Fund nearly 40 years ago, Soros, who emigrated to the United States from Hungary, created one of most envied records in the industry, returning about 20 percent a year. But recently volatile market conditions have taken their toll on the fund as it lost 6 percent in the first half of 2011 and gained only 2.5 percent last year.
In a letter to investors, Soros' two sons, the fund's deputy chairmen, cited impending industry regulation as a reason for returning the money now.
Bloomberg first reported the news.
EXEMPTIONS NO MORE
Under the new Dodd-Frank Act, hedge funds will be forced to register with financial regulators, giving the Securities and Exchange Commission fresh insight into exactly how these generally secretive portfolios make money. But family offices are treated more leniently under the new regulations.
Ever since their father reorganized the Quantum fund in 2000 after heavy losses, the firm has effectively been operating as a family office, relying on various exemptions to avoid registration, the Soros brothers wrote.
Now that many loopholes have been closed, it made more sense to return outsiders' money instead of going through the expensive and time consuming process of registration, people familiar with Soros' thinking said.
"An unfortunate consequence of these new circumstances is that we will no longer be able to manage assets for anyone other than a family client as defined under the regulations," Jonathan and Robert Soros said.Read more.