Investors turn their backs on "black swan" hedge funds http://www.reuters.com/article/2013/04/05/uk-black-swan-funds-idUSLNE93400F20130405 " Capula, one of the top 10 largest European hedge funds, has lost close to half the assets - about $1.1 billion - in its Tail Risk Fund since mid-2012, two investors in the fund said. The fund, which now runs $1.4 billion, fell more than 14 percent last year as investors' belief grew that the ECB would do all it could to calm the euro zone crisis when borrowing costs were soaring for Spain and Italy. Other tail risk funds also slumped in 2012, with U.S.-based Pine River Capital's down 36 percent and its assets falling to $200 million from $300 million, a separate investor in its fund said. Both firms declined to comment. Unigestion set up a tail risk product after the financial crisis began but shut it in 2010 as markets rallied. Last year the firm considered re-launching but decided not to proceed. "If you are a long-term investor, it just never makes you money," Rousselet said. As a form of insurance tail risk funds lose investors money if markets are flat - and even more if prices rise - but they can pay out vast sums if markets fall precipitously. Pine River's fund, which charges no performance fee so that its managers have no incentive to stray from the mandate that it acts as insurance, is designed to lose 2.5 percent per month in flat markets. ... PIMCO's tail risk products now manage $50 billion, up from about $10 billion in 2009, after investors smarting over losses in the financial crisis looked for protection. However, Capula has cut the amount of its flagship Global Relative Value Fund invested in its Tail Risk strategy to 15 percent from 20 percent, one of its investors said. This year the firm "re-positioned" its Tail Risk Fund so it is less correlated to short-term market moves. It is up 0.56 percent so far in 2013, a person familiar with the fund said. Pine River's tail risk fund fell 3.8 percent in the first two months of this year, one source familiar with the firm said. "