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Anchorage Capital Group is shuttering its doors after the 18-year-old hedge fund produced dismal results in recent years, with distressed debt emerging as a challenging asset class to invest in.

The hedge fund only returned 0.6% in 2018, 1.5% in 2019 and 4.4% in 2020 as it sought to generate returns similar to equities but with lower volatility. The fund held $7.4 billion in assets and rose by 18.5% through November because of its investment in MGM Holdings Inc., which was acquired by Amazon.

At the end of 2017, Anchorage Capital Group managed about twice that amount of money, or $14.6 billion.

The founder and chief executive of Anchorage Capital Group, Kevin Ulrich, said he would stay on to serve as chairman and provide guidance on investments, invest in new products and remain “a material stakeholder” in Anchorage, according to an article in the Wall Street Journal.

Anchorage Capital Partners, its credit fund, has stopped clients from obtaining their money currently, the company told its clients in a letter on Dec. 15 that the WSJ said it read. 

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The letter did not give clients a date of when they could redeem their investment.

Anchorage has a total of $30 billion of assets and said it would prioritize its $18 billion structured credit fund and $4 billion private equity fund instead.

Several distressed debt funds such as Ares Management Corp., Apollo Global Management Inc., Brigade Capital and Blackstone Inc. have shuttered their doors or choose to invest only in structured finance and private credit, the WSJ article said.

Anchorage faced other issues, including senior investment professionals leaving the firm, according to an article in Bloomberg. A woman also sued Ulrich in 2020, alleging sexual battery in a New York hotel in 2019. 

While the complaint was withdrawn, an Anchorage client told Institutional Investor in November 2020 that Ulrich settled with the woman. The article also said that clients were unhappy that the hedge fund did not disclose the allegations after they were made public.