Hedge fund exits rise in June as investors reposition at mid-year

Date: Monday, June 24, 2013
Author: Reuters

Requests to pull money out of hedge funds rose in June as investors used the mid-year point to review their portfolios and release cash to spend elsewhere.

Hedge fund administrator SS&C GlobeOp's forward redemption indicator, a monthly snapshot of clients giving notice to withdraw their cash which shows the percentage of assets under administration, stood at 3.88 percent in June, a moderate rise from May's measurement of 3.77 percent.

Bill Stone, chairman and chief executive officer at SS&C Technologies described the June increase as "typical semi-annual redemption activity", such as investors freeing up cash to spend on summer holidays.

Hedge funds have profited from a sharp rally in financial markets since last summer, but some investors are disappointed that many hedge funds have failed to match equity markets.

So far this year, hedge funds have returned 3.95 percent according to Hedge Fund Research, compared with a gain of almost 13 percent from the S&P 500 .SPX.

Stone said speculation that central banks, particularly the United States Federal Reserve, would scale down their asset purchasing programmes, could impact hedge funds because investors were hanging on to their cash until a decision was made.

"The world is awfully full of cash right now and there's almost no return on cash so I think that's indicative that people are on the sidelines waiting for more clarity (on exactly when asset purchases will be tapered)."

Fed Chairman Ben Bernanke said overnight the U.S. economy was growing fast enough for the central bank to begin slowing the pace of its $85 billion monthly asset purchases later this year, with the goal of ending it in mid-2014.

Around 10 percent of the global hedge fund industry is covered by SS&C GlobeOp's data.