RAB Capital's assets plummet and fees fall

It is symptomatic of the turnaround in the fortunes of hedge funds that analysts now suggest that RAB Capital will struggle to break even this year.

Assets under management were $1.9 billion as at the end of December, some $100 million less than the London manager predicted in November.

Inevitably, that means performance fees will suffer, and RAB's dropped almost 60 per cent, to £51 million.

Like the wider industry, RAB is tightening its belt. In November, it shut a handful of underperforming funds. Some managers have been shown the door and those that have stayed received considerably smaller bonuses.

Cost-cutting will have saved RAB about £20 million in administrative expenses over the year.

There are other indicators that RAB is taking extra care over the investment process. Charles Kirwan-Taylor has been named as chief investment officer. Unusually, he will not be running funds at RAB at the same time. John Mattimore, a buyside veteran, has also been brought in as chief risk officer.

The greater reassurance comes from RAB's balance sheet. It has more than £50 million in cash, some £5 million greater than its current stockmarket value. Unliked many of its peers, that at least gives the company staying power. However, like the investors locked into RAB's funds, shareholders should not count on seeing any of their cash in a hurry.

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