Hedge fund exit requests at record low: GlobeOp

Date: Monday, January 23, 2012
Author: Anjuli Davies, Reuters

Redemption requests by hedge fund clients have fallen to the lowest monthly level on record as improving market sentiment combined with a typical seasonal lull in asset re-allocation, data shows.

The GlobeOp Forward Redemption Indicator, a monthly snapshot of clients giving notice to withdraw their cash as a percentage of GlobeOp's assets under administration, measured 1.85 percent in the January report, down from 4.58 percent in the December report, which shows requests to redeem funds in January, which is typically a period of heavy re-allocation.

That is the lowest recorded since the January report in 2008, when GlobeOp began compiling the index.

January report notifications were also substantially lower than the same time last year, when requests stood at 2.79 percent.

"It's more to do with a reallocation of investments. People take money out in January and redeploy it in February and March," GlobeOp Financial Services (GO.L) Chief Executive Hans Hufschmid said.

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For a graphic on the January Index, see: here

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The $2 trillion hedge fund industry had a humbling year in 2011, with the average fund dropping 4.8 percent -- the second negative year in four -- recording net capital outflows of $127 million in the fourth quarter, research compiled by Hedge Fund Research showed.

But 2012 could see investors put some $80 billion of new money into the industry, a report conducted by Barclays Capital, titled 'The Money Trail' predicts.

GlobeOp's data covers around $173 billion of hedge fund assets under administration, or around 8 to 10 percent of the global hedge fund industry.

The GlobeOp Forward Redemption Indicator hit an all-time high of 19.27 percent in November 2008 in the wake of the collapse of U.S. investment bank Lehman Brothers. Its previous all-time low of 2.08 percent was recorded in July 2011.