Lime Asset Management’s problems have spread to the industry

South Korea hedge funds are experiencing the worst run on assets in history. A scandal at Lime Asset Management has fueled outflows on local hedge funds.

In total, investors have pulled $598 million out of hedge funds in South Korea in just two months. In local currency, that figure totals 700 billion won. Assets under management have dropped to 700 billion won, according to an analyst at NH Investment & Securities.

Bloomberg notes that this is the first time since late 2017 that investors pulled money over two straight months.

South Korea Hedge Funds and Low-Interest Rates

South Korea hedge funds saw a boom in interest in recent years. Low-interest rates have local investors turning to alternative strategies in the face of surging equities and limited income options. However, Lime Asset Management found itself experiencing a Woodford moment last month.

The company froze redemptions on several of its funds after it couldn’t meet redemption requests at the pace of investor demands. The $3.5 billion hedge fund struggled to meet requests due to the nature of their investments. Their illiquid assets included mezzanine debt and private loans. The suspension impacts more than 3,000 investors.

The Financial Times profiled a 72-year-old retiree in Seoul two weeks ago. YB Choi said that he has roughly his entire retirement savings locked up in Lime Asset Management. Stories like Choi’s represent the fears emerging across the country.

Related: MBK Partners Eyes $6 Billion Buyout Fund