Clients bet hedgies can ride out choppy markets-data

Date: Thursday, July 21, 2011
Author: Laurence Fletcher, Reuters

Hedge fund clients' demands for their money back fell to a record low this month, data showed on Wednesday, suggesting investors view these freewheeling portfolios as one of the best ways to ride out the euro zone debt crisis.

The GlobeOp Forward Redemption Indicator -- a monthly snapshot of clients giving advance notice they want their money back as a percentage of GlobeOp's assets under administration -- fell to 2.08 percent.

This is below the 4.01 percent seen in June, which was the biggest month of withdrawal requests since December 2010, and 3.92 percent in May.

While July tends to see lower redemption demands than preceding months, this month's exit requests are the lowest since GlobeOp's records begin in January 2008.

"Where are you going to put your money (if you take it out of hedge funds)?" GlobeOp CEO Hans Hufschmid told Reuters.

"From a market perspective there will be very good opportunities coming up, and hedge funds are as good a place as any to take advantage of them when they do.?"

GlobeOp, an independent fund services firm whose data covers $174 billion of assets under administration, took its monthly snapshot of hedge fund redemption requests on July 18.

The drop in withdrawal demands comes despite a tough period for hedge funds, which lost 1.14 percent in performance terms in May and 1.18 percent in June, according to Hedge Fund Research, compared with falls of 1.13 percent and 1.67 percent in the S&P 500.

The figures will also be welcome news for the hedge fund managers after GlobeOp's Capital Movement index, which tracks actual net flows, showed net withdrawals hit their highest level in nearly two years last month.

"These are pretty good signs for the hedge fund market. There doesn't seem to be concern or movement out of funds because of performance over the last few months," Hufschmid added.