Merton's Firm Shuts Down Credit Hedge Fund After Three Months

Schadenfreud City: Robert Merton, the Nobel Prize- winning economist and co-founder of defunct hedge fund Long-Term Capital Management, shut down his new firm's latest fund after three months because it didn't raise enough money.

Merton's Integrated Finance Ltd. closed the IFL Continuum Fund in June, said Beth Burrus, a managing director of the New York-based firm. The fund, which concentrated on credit securities, had collected $30 million since its start in March.

``There has been a huge volume of credit-oriented hedge funds launched in the last 18 months, some raising more than a billion dollars, and the market seems to be saturated,'' said Tim Jackson, a partner at Rocaton Investment Advisors LLC in Norwalk, Connecticut, which helps clients choose hedge funds. ``By this year, a lot of people had already made allocations.''

IFL Continuum struggled as hedge funds attracted $42.1 billion from April through June, the most in one quarter since at least 2003, according to Hedge Fund Research Inc., a Chicago-based firm that tracks the $1.2 trillion industry. The influx was led by funds that invest in equities and in companies involved in acquisitions and other corporate events.

http://www.bloomberg.com/apps/news?pid=20601087&sid=api7F5j8W_nY&refer=home