Large losses on derivative transactions at Geode Capital Management forced the giant investment firm to close its hedge fund business.
Geode manages all of Fidelity Investments’ equity index funds and the company accounts for the majority of the company’s $ 720 billion. But it also offers a range of risky, hedge fund strategies to wealthy clients and institutions.
The people familiar with the matter have lost the largest $ 250 million private fund after its bets on stock volatility soured last year. The fund fell by about 36% by spring. The people said the losses and subsequent margin calls forced the Geode Diversified Fund to liquidate other unrelated positions.
Geode said the geode closed the fund and left its broader Absolute Return business. The losses and closure of the hedge fund business have not been reported before.
The people familiar with the matter have recently eliminated several positions serving the business.