To avoid new U.S. hedge fund regulations that take effect next March, billionaire philanthropist George Soros has decided to return nearly $1 billion to outside fund investors by the end of the year.
His firm, Soros Fund Management, which now manages $25.5 billion, will focus on managing only family assets. The move enables the firm to avoid new financial regulations that would have required it to register with the Securities and Exchange and undergo periodic inspections.
“We wish to express our gratitude to those who chose to invest their capital with Soros Fund Management LLC over the last nearly 40 years,” Soros’ sons Jonathan and Robert, co-deputy chairmen of the funds, wrote in a letter to outside investors acquired by Bloomberg News. “We trust that you have felt well rewarded for your decision over time.”
The money that will be returned to outside investors is only a small portion of the $25.5 billion the fund manages, the New York Times reports. Yet it marks the end of Soros’ 40-year career as a hedge fund manager and the fourth time in the past year that a hedge fund heavyweight has decided to revert to managing only their own wealth. The other managers to strike out on their own include Stanley Bruckenmiller, Chris Shumway and Carl Ichan.
Over its 40-year history, Soros’ flagship Quantum Endowment Fund has averaged a 20 percent annual return. In 1998 it was the biggest hedge fund in the world with $22 billion in assets before the tech bubble burst two years later. More recently, the fund has suffered. In the first half of this year, Quantum lost 6 percent, following a gain of 2.5 percent in 2010, Bloomberg reports.
Soros, 80, claims his appetite for risk comes from his father’s bravery in saving his family and others from the Nazis when they invaded Budapest, their hometown, in 1944. To flee Hungary, Soros’ father got false papers for his family and friends identifying them as non-Jews.
“Instead of submitting to our fate, we resisted an evil force that was much stronger than we were – yet we prevailed,” Soros wrote in an essay published in the New York Review of Books in June. “This left a lasting mark on me, turning a disaster of unthinkable proportions into an exhilarating adventure.”
As a philanthropist, Soros established his first foundation, Open Society Fund, in 1979. The fund initially focused on promoting democracy and capitalism in Eastern Europe. Since then, his network of foundations has grown to operate in 70 countries around the world.