Fund Of Funds Liongate Sees Big Inflow In May, June

/Home/Madoff Fraud to Impact Fund Management Biz/Challenges to Fund of Fund Business Model

Fund Of Funds Liongate Sees Big Inflow In May, June
June 18, 2009
The last six months have been a disaster for the fund of hedge funds industry, as investors flee in the wake of the Bernard Madoff scandal. But for one fund of funds shop, the last six weeks have been anything but.

Liongate Capital Management has garnered US$300 million in net inflows over the past month and a half, Reuters reports. And its co-founder said others’ pain were the source of its gain.

“Institutions have come to us,” Randall Dillard said at the GAIM conference in Monaco. “Others were compromised and they have been giving us all their allocations.”

Two-thirds of the new money have gone into Liongate’s managed accounts, Dillard said. Investors have been clamoring for managed accounts since the Madoff scandal broke, believing that they offer greater protection and transparency.

Dillard said that he expects other funds of funds to turn things around, arguing that the industry has hit a “tipping point” after the huge outflows of the last two quarters.

“It’s not unusual after a crisis of that magnitude that people sit and see if markets stabilize,” he said. “And after March, markets have stabilized.”

Dillard also said that London-based Liongate is planning to open a pair of new offices, one in Switzerland and another in Mexico City.