Stockholm - Brummer & Partners, a $14 billion hedge fund firm, has raised $500 million for a new fund requiring clients lock up their cash for three years, in a sign some investors are willing to sacrifice liquidity for the chance of better returns.
"In recent years, financial markets have become increasingly short term. This creates opportunities if we have a mandate to take long-term decisions based on locked-in capital," Brummer partner Per Josefsson said in a statement on its website.
The fund, which will invest in equities, corporate bonds and government bonds, will launch in October, Brummer said. The $500 million includes $130 million from the three managing partners, a person familiar with the fund said.
The new fund is set to be one of the largest launches of 2012, a year when the number and size of start-ups has fallen amid a tough environment for asset raising.
Hedge funds have struggled to make money amid choppy markets and the euro zone debt crisis, not helped by investors looking for funds allowing cash withdrawals within weeks or months. The average fund fell 5 percent in 2011 and is up 2.74 percent this year, data from industry tracker Hedge Fund Research showed.
Josefsson will manage the new fund alongside Brummer partners Peter Thelin and Bo Bortemark. The three previously managed a long-short equity fund backed by Brummer.
The three are joined by Stefan Engstrand, who also worked on Brummer's Zenit fund, ex-Goldman Sachs' Christian Fredriksson and Michael Falken, who recently worked at Ohman.
Brummer has grown into one of Europe's largest hedge funds since being founded by Patrik Brummer in the mid-1990s.
Its flagship funds include managed futures fund Lynx, and Nektar, a fixed income relative value and macro strategy.
The new fund will give investors three options from locking up their money for three years to, for the highest fees, the ability to withdraw 25 percent of their cash every quarter with five days notice.