The demise of Ivy Asset Management apparently had been anticipated for some months by its employees.
The demise of Ivy Asset Management apparently had been anticipated for some months by its employees.
On Wednesday, March 31, a company timeline on ivyasset.com, the firm's website, ended with the year 2009. It was as though time stopped for the firm Dec. 31.
By the next day, that timeline, as well as details about investment strategies and vehicles, executives and risk management, were gone.
News that its parent, BNY Mellon Asset Management, was closing the hedge-fund-of-funds firm began to ripple through the investment community that Wednesday as staff members started to contact consultants and investors about the closure.
Hedge-fund-of-funds managers, who asked not to be identified, reported before the closure that resumes were pouring in from Ivy staff members, nearly all of whom then received pink slips.
BNY Mellon spokesman Mike Dunn declined to comment directly on Ivy's closure, but said that a strategic review of Ivy's business that began in January “is continuing.”
Several sources, however, all of whom insisted on anonymity, said BNY Mellon was shutting Ivy's operations and encouraging the few remaining clients to move their separate-account investments to the bank's EACM Advisors unit, which also manages hedge funds of funds.
The sources said only a handful of Ivy relationship managers who are close to the existing clients have been retained and will move to EACM, which managed $2.6 billion in separate and commingled hedge funds of funds as of Dec. 31. BNY Mellon's hedge-funds-of-funds manager MGAI, which is not affected by Ivy's closure, managed $517 million as of year-end 2009.
Ivy, founded in 1994, was one of the industry's earliest hedge-fund-of-funds firms. A predecessor firm of BNY Mellon acquired Ivy in 2000. Ivy once managed assets in hedge funds of funds for a marquee institutional client list including the $42.7 billion Massachusetts Pension Reserves Investment Management Board and the Illinois State Board of Investment, with assets of $10.1 billion.
The firm's assets peaked at more than $15 billion at the end of 2006.
Consultants and other sources who asked not to be identified said constant organizational changes took place after Sean Simon, son of founder Lawrence Simon, took over as head of the unit in 2006. Coupled with lackluster performance of Ivy's commingled funds of funds, the turmoil tried clients' patience. Clients started to drop Ivy in earnest after losses in 2006 from soured investments in Amaranth Advisors LLC.
New York Attorney General Andrew Cuomo reportedly is investigating Ivy Asset Management and advice it provided as a subadviser about investments in Bernard L. Madoff Investment Securities LLC.
Ivy's assets had dwindled to less than $5 billion as of Dec. 31 and now total about $2.5 billion, with the bulk managed for four or five large institutions in separate accounts, said a source with knowledge of the situation, who asked not to be identified.
Christine Williamson is a reporter with sister publication Pensions & Investments.
