Centerbridge Partners has been in a giving mood of late. In the first quarter the $20 billion, New York–based alternative-investment firm returned $600 million to investors in its Credit Partners hedge fund, which launched in 2007 to take advantage of value-oriented credit opportunities and is run by Centerbridge co-founder Jeff Aronson. Having given back an additional $500 million last December, the fund now manages $7.7 billion.

Why the largesse? Despite ongoing global economic uncertainty, Aronson and his team weren’t seeing much in the way of attractive distressed investments. As a result, the Credit Partners Fund, which closed to new money in 2011, was sitting on 28 percent cash. Centerbridge could have kept the dough and pocketed its 1.75 percent management fee, but Aronson thought better of that. “It is not our money,” he says. “If we can’t find compelling investment ideas, the right thing to do is to give the money back to investors.”

Aronson did this before, in 2004, when he was a portfolio manager with New York alternative-investment firm Angelo, Gordon & Co. But it’s rare for money managers of any stripe to give back the cash they raise. Another exception is former Goldman Sachs trader David Tepper, who’s been known to return capital to investors in his hedge fund firm Appaloosa Management.

Deep-value investor Aronson stresses that Centerbridge currently likes all of the positions in its credit fund portfolio. The firm has been doing a lot of work in Europe as banks there slowly shed illiquid assets, he says. But with high-yield bond issuance back up in the U.S., credit spreads narrowing and investors hungrily searching for returns, Aronson finds much of the credit market a bit too “frothy.” Although there might be relative-value opportunities, that isn’t Centerbridge’s game — hence the decision to give back money while keeping a small cash cushion.

“I know the track we are taking is unusual,” says Aronson, who thinks his firm will benefit in the long run. If Centerbridge better serves investors by not diluting results with cash or allocating to less attractive opportunities, it may have more capital when market conditions improve.