Hedge fund exit requests hit new April low - GlobeOp

Date: Tuesday, April 24, 2012
Author: Anjuli Davies, Reuters

Investor demands to pull money out of hedge funds fell in April, data shows, in a sign that renewed volatility in financial markets may not be piling fresh pressure on more clients to quit the sector.

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 2 percent in April, down from 3.23 percent in March but slightly above an all-time low of 1.85 percent in January.

"April's forward redemptions dropped to two percent, the second lowest month on record and the lowest April in the history of the Indicator," GlobeOp Financial Services (GO.L) Chief Executive Hans Hufschmid said.

By far the biggest jump in new redemption requests was for funds offering an exit in the next two to three months, where 1.11 percent of investors asked for their money back.

A year ago the indicator measured 2.45 percent, while in April 2010 it was 2.83.

The $2 trillion (1.24 trillion pounds) hedge fund industry lost 5.3 percent in performance terms last year, according to Hedge Fund Research, struggling to cope with volatile markets as the crisis in the euro zone deepened.

However, in the first three months of the year the average hedge fund is up 4.9 percent, the best quarterly returns in five years, attracting $16 billion in net new money.

Markets have been boosted by the European Central Bank's 1 trillion euro cash injection - the so-called Long Term Refinancing Operations - designed to avoid another credit crunch.

But renewed concerns about the euro zone's lack of political will to tackle the region's debt burden has increased volatility in financial markets in recent weeks.

GlobeOp's data covers around $187 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, but has not risen above 10 percent since September 2009.