Rate of hedge fund closures on the rise

The Securities and Futures Commission sent in administrators to Descartes Athena Fund SPC. It also got a court order to freeze more than $100m (£67m, €75m) of assets connected with the fund and started proceedings against 11 unnamed people.

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Such a publicly documented end is unusual for a hedge fund. Most die as they live: as far from the spotlight as possible. “Only a fraction of 1 per cent of hedge funds close because of fraud,” says John Trehey, a lawyer in Hong Kong with the Cayman Islands legal firm, Maples and Calder. “There’s a distinction between honest and dishonest failure.”

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The rate of closure, it says, is likely to increase as shrunken funds find it difficult to cover costs because of a large rise in redemptions since September.