Hedge fund exit requests hit 2012-high in September: data

Date: Friday, September 21, 2012
Author: Laurence Fletcher, Reuters

Client demands to pull money out of hedge funds rose to their highest level this year in September, industry data showed, as investors reacted to lackluster performance.

Hedge fund administrator SS&C GlobeOp's forward redemption indicator, a monthly snapshot of clients giving notice to withdraw their cash as a percentage of its assets under administration, measured 3.76 percent in September.

That was up from 3.34 percent in August and higher than the 3.11 percent seen a year ago.

Hedge funds have gained 3.49 percent in performance terms in the first eight months of this year, according to Hedge Fund Research, which is well below the 13.5 percent return from the S&P 500 with dividends.

Many managers have been nervous about macroeconomic conditions this year as the euro zone battles to contain its debt crisis and China's economy slows, and have consequently missed out on rallies in equity markets.

However, the SS&C GlobeOp index is still well below levels seen during the 2008 credit crisis.

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.

"Forward redemptions slightly increased in September which is typical as we approach quarter-end but redemption notices still remained at moderate levels, indicating that alternative investments continue to hold their attraction," said Bill Stone, chairman and chief executive, SS&C Technologies.

SS&C 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.