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Investors pull $3.7 bln from hedge funds in June

Date: Wednesday, August 11, 2010
Author: Svea Herbst-Bayliss, Reuters

Investors had added $4 bln in May

React to poor performance numbers

Redemptions expected to continue

Investors pulled $3.7 billion out of hedge funds in June, punishing these loosely regulated portfolios for their poor performance in May, according to data released on Monday.

Investors added $4 billion in May after having pulled out $3.4 billion in April.

Emerging market hedge funds saw the biggest outflows with clients pulling $2.1 billion from these types of portfolios, data compiled by industry research firms BarclayHedge and TrimTabs showed.

Managers specializing in fixed income funds pulled in $1.4 billion in new money, marking the biggest flows as investors sought the safety of bonds.

Hedge funds lost 3.2 percent in May and 1.1 percent in June when financial markets tumbled amid growing concern about the U.S. economic recovery and Europe's debt crisis. This marked the first two-month losing streak since January and February 2009, the research firms said.

Investors tend to respond quickly to poor returns but since many hedge funds do not allow investors to exit immediately, more redemptions could follow in coming months, the researchers said.