By Rachael Levy 

Fortress Investment Group is facing fresh questions over its hedge fund business with the departure of Jeff Feig, co-CIO of its global macro fund and co-president of its liquid markets business. While the departure could raise red flags for investors, who may worry about the overall direction of the firm, whether investors ultimately flee depends on how Fortress explains the reshuffling and whether it can turbo-charge performance, say observers.

Feig is leaving after less than a year on the job, marking the second time in six months the firm has reshuffled management. And though Feig showed promise at the beginning of his tenure, investors are unlikely to be swayed by the macro fund’s overall performance.

“Unfortunately, I got caught in the Swiss franc trade in January, which put us on the back foot,” Feig tells FundFire Alts. “While I have been profitable outside that trade, we as a fund have struggled in the markets as of late.”

When Feig had joined last September, the firm’s macro fund was already down 5.78% year to date. Feig, who was co-CIO of the macro fund with Fortress principal Michael Novogratz, helped the fund get close to flat by year end. But the start of 2015 turned ugly for Fortress, when a wrong-way bet on the Swiss franc sent the fund tumbling 6.86% for the month.

The fund lost 7.1% through May. And through the first quarter, a drop in the macro fund’s assets under management caused Fortress to lose $4.1 million in management fees.

The losses portended trouble for Feig, who had worked as Citigroup’s global head of foreign exchange for 25 years before joining Fortress.

Novogratz will remain at the helm after Feig leaves, Reuters reported when it broke the story earlier this week.

“It’s kind of widely expected that there had to be some kind of changes at the macro fund, given the performance,” says Stephen Ellis, director of financial services equity and credit research at Morningstar.

Feig says he doesn’t have a new job lined up, and though a final date hasn’t been set for his departure, he adds that he expects to leave in the coming weeks.

“Mike [Novogratz] has had a knack for coming back very strong from losses and hitting new cumulative highs in returns,” Feig says. “I am confident he can do that again and so are most of our investors. Unfortunately for me, tightening here means I leave.”

A spokesperson for Fortress didn’t respond to requests for comment.

Feig’s departure may have an upside for the firm, despite the questions circulating. “Fortress should be able to argue to investors that it has addressed its performance issues,” Ellis says. “For outflows to improve to inflows, I would expect that we’d need to see very good performance going forward before investors would be willing to commit more capital to the strategy.”

Feig’s departure shouldn’t affect other parts of Fortress’ business, which includes private equity and permanent capital funds, because those sectors operate separately, Ellis adds.

Others caution, however, that Fortress’ recent changes may make it harder to win investors. Fortress also saw its liquid markets unit chief risk officer Sherif Sweillam and portfolio manager Tye Schlegelmilch resign in January, as reported.

“Change is never good for capital raising efforts,” Jay Rogers, president and founder of Alpha Strategies Investment Consulting, said in an email. “Investors are looking for stability when writing checks.”

Fortress’ performance isn’t completely out of line when compared to macro strategies overall. The strategy industry-wide saw $19 billion in investor outflows last year, only seeing inflows again of $4.8 billion through May. Its performance has been tepid, with the strategy gaining 0.63% through May, according to eVestment.

With macro managers generally under pressure, the reshuffling doesn’t help Fortress.

“Generally any manager facing both poor performance and changes to the top investment staff will be put in the penalty box by most investors,” David Frank, CEO of third party marketer Stonehaven, said in an email. “Macro managers are chosen to a large degree based on their ability to produce non-correlated returns, especially in challenging environments. This is turning out to be a year with significant return dispersion among macro managers, so performance in this environment is being highly critiqued.”

Going forward, Fortress will have to be open about its changes to gain investor confidence, observers say. And the shakeup isn’t necessarily an omen; it can also give institutional investors a chance to reassess the fund.

“I don’t think it’s a knee-jerk reaction to pull assets,” says Jeff Strange, research director at marketing and distribution consultant kasina. “It’s a trigger to reassess the investment and learn more about the direction of the firm.”