Geneva's oldest private bank to shutter two funds

Date: Wednesday, June 3, 2009
Author: Reuters.com

* Lombard Odier to close two funds of hedge funds

* Seeking to restructure product range

* Bank to launch two new funds at end of June

By Martin de Sa'Pinto

ZURICH, June 2 (Reuters) - Swiss private bank Lombard Odier Darier Hentsch & Cie confirmed it would liquidate its Delta Global and Alternative Strategies funds of hedge funds, but said on Tuesday it would launch two new funds.

The bank has, like most peers, seen redemptions and asset value reductions during the financial crisis, but it said in response to a SonntagsZeitung report at the weekend it had enough liquidity to meet current redemption requests.

Lombard Odier co-head of hedge funds Cedric Kohler said liquidation would enable the bank "to create the economic equivalent of side pockets and to restructure our product range by launching new products at the end of June".

A side pocket is used by hedge funds to hold illiquid assets and keep them separate from liquid ones. This can help funds avoid having to sell illiquid assets at inopportune times.

Fund data show Delta Global and Alternative Strategies lost 41 percent and 30 percent respectively in 2008. Delta was launched in 1991 and returned a total of 168 percent to the end of April, while Alternative Strategies, launched in 2002, returned 13 percent.

Lombard Odier expects to distribute 60 percent of the funds' combined 1.1 billion Swiss francs ($1.03 billion) in net asset value in 2009 and the remainder in 2010, since some underlying funds will take more time than others to liquidate.

Two new products have been prepared for launch at the end of the month; a multi-strategy fund called LO Dynamic Alternative Strategies, and LO Alternative Beta which aims to replicate a broad hedge fund index.

Founded in 1796, Lombard Odier is Geneva's oldest active private bank and is run by its eight partners. Lipper data show the bank's Swiss-registered assets fell to 12.7 billion francs at the end of April from 17.7 billion a year earlier.

LODH said it had total client assets of 127 billion francs at the end of 2008.

Kohler said Lombard Odier currently manages about 5 billion Swiss francs in hedge fund-related products including close to 2 billion francs invested directly in its own fund of funds. ($1=1.064 Swiss Franc)