Though the move was not expected, in May 2012, Morgan Stanley had put the funds on ‘watch’ citing its poor performance and in an email sent to the unit’s financial advisers, the status of the funds had been changed to ‘redeem’ from ‘watch’, conveying to the clients that they should redeem their holdings in the funds.
The Advantage and Advantage Plus Funds of John Paulson are umbrella portfolios that employ all of Paulson’s various investing strategies.
Though Paulson made billions betting against the housing market, his venture into gold has been far less successful and the weak performance of this strategy has been a big drag on the Advantage Funds.
Meanwhile, Paulson’s firm and Morgan Stanley have declined comment on the matter.
A person familiar with the funds has said that assets in the two funds held by Morgan Stanley’s brokerage clients totaled around US$100 million and that the two funds managed a combined US$5.7 billion as of 1 November 2012.
The other Paulson funds however will continue to be offered by Morgan Stanley Wealth Management.