KKR Equities Strategies Fund Was Liquidated Last Week 'Lack of Scale' Cited as Driving Factor in Decision to Close Firm's First Stock Hedge Fund
KKR KKR -0.22% & Co. has thrown in the towel on its first stock hedge fund.
The KKR Equities Strategies fund was liquidated last week, less than three years after it was launched, a spokeswoman confirmed. About a dozen people, including the former Goldman Sachs Group Inc. GS -0.58% traders who ran the fund, will depart the firm in the coming weeks, said a person familiar with the firm.
A KKR spokeswoman said the hedge fund's "lack of scale" was a driving factor in the decision to close it. The fund had about $500 million under management as of the start of May, about one-third of which was from KKR and its employees. The fund had fewer than 20 external investors.
Since its start in 2011, the fund reported an average annualized return of about 5%, a person with knowledge of performance said, lagging behind peers tracked by research firm HFR Inc.
The decision is the latest sign of the headwinds large financial firms face as they branch out in a bid to bring in new revenue and tap into new areas, often in search either of stronger growth or less-volatile results.
Though the hedge fund business can be lucrative, the lion's share of money flowing in in recent years has gone to established industry veterans, and startups face tough odds if they are unable to quickly post strong performance.
Bob Howard, a former executive on Goldman's proprietary trading desk who ran the KKR fund, will remain at the buyout shop in a part-time, "senior adviser" role.
Mr. Howard didn't respond to a request for comment.