Goldman Sachs Group Inc., the second-largest hedge fund manager, will invest about $2 billion to bail out its Global Equity Opportunities Fund after a 28% decline this month.
Investors including Maurice "Hank" Greenberg, the former chairman of American International Group Inc., and the billionaire Eli Broad will put about $1 billion into the hedge fund, Goldman said Monday.
Assets in the Opportunities fund dropped by $1.4 billion, to $3.6 billion, in the past two weeks as its computer-driven investment strategies were upended by turmoil in the financial markets.
Goldman said it was not rescuing the fund, which had fallen along with other so-called quant funds that use mathematical formulas to make trades. Instead, the infusion will give managers "more flexibility to take advantage of the opportunities we believe exist in current market conditions," Goldman said.
The $1.7 trillion hedge fund industry has been roiled in July an August as credit spreads widened to the most in two years and U.S. stocks rose or fell by more than 1% on 13 days.
