A Matrix hedge fund that was advertised as having a ‘low degree of risk’ is likely to remain suspended for another year after losing 38.19% in the first 11 months of 2009.

The $229 million Matrix Asset Based 2 Fund, which is domiciled in Bermuda and listed on the Irish Stock Exchange, invests in a fund of hedge funds managed by Stillwater Capital Partners.

Matrix has distributed it through Sipps and offshore bonds. The 2.5 times geared fund was caught out by the credit crunch when the asset-backed loan markets froze. It also had its leverage facility of about $190 million cancelled by KBC Financial Products in the fourth quarter of 2008.

Stillwater has put in redemption requests to all 43 underlying hedge funds and has returned about half of the leverage facility. Investors’ redemption requests will not be met until the leverage facility has been repaid.

One discretionary wealth manager invested in the Matrix hedge fund said it was frustrating to see an investment advertised as ‘low risk’ depreciating in value so steeply while its redemption feature was suspended.

However, Matrix director Bridget Guerin said: ‘The risks of investing and being in a geared hedge fund were clearly stated in the prospectus. What actually happen in 2008 was something of a Black Swan event and the circumstances that arose nobody could have envisaged.’