Hedge-Fund Investors Remove Record $152 Billion in Last Quarter

Date: Wednesday, January 21, 2009
Author: Saijel Kishan, Bloomberg

Hedge-fund investors withdrew a record $152 billion in the fourth quarter as the industry posted its worst returns in almost two decades, according to Hedge Fund Research Inc.

Global assets dropped to $1.4 trillion at the end of the year, the same level as 2006 and $525 billion less than a peak of $1.93 trillion in June, the Chicago-based firm said in a statement today.

“Investor risk aversion remained at historically extreme levels through year end,” Kenneth Heinz, president of Hedge Fund Research, said in the statement. “Investor redemptions were widespread and indiscriminate across fund strategies, regions, asset sizes and performance.”

Investments by hedge funds lost a record 18.3 percent last year, according to the firm, the most since it began tracking data in 1990. The fourth-quarter withdrawals contrasted with 2007, when hedge funds attracted an all-time high of $194 billion from investors, Hedge Fund Research said.

Earlier reports also showed a decline in hedge-fund wealth last year. Assets fell 48 percent $998.4 billion, according to a Jan. 14 report by TrimTabs Investment Research and BarclayHedge. Eurekahedge Pte said Jan. 13 that the industry shrank by about a fifth to $1.5 trillion at the end of the year.

To contact the reporter on this story: Saijel Kishan in New York at skishan@bloomberg.net