Hedge Fund Gains Don’t Prevent Redemptions
Hedge funds continued to lose money in the first quarter of 2009 despite improved performance. Investors remain skeptical about a portion of the financial industry facing widespread consolidation and structural change.
Investors withdrew some $104 billion, or 7.4% of industry assets, for the three months ending March 31.
The total redemption figure fell from $152 billion in the last quarter of 2008, but contributed to a record withdrawal from funds of hedge funds in the first quarter of 2009 – $85 billion, compared with $50 billion in the fourth quarter of 2008, said Chicago-based HFR.
Meanwhile, performance rose, with HFR’s composite index posting a gain of 0.53%. Funds of funds recorded a gain of 0.47%, said HFR.
The slight gains after last year’s record losses aren’t enough to keep investors interested and most are waiting for the industry to stabilize before going back in, experts said.
“Investor risk aversion remains at elevated historical levels as industry consolidation continued through quarter-end,” HFR President Kenneth J. Heinz.
Turmoil in the industry over the last year, which saw numerous funds taken out, is continuing, with investors demanding better financial terms and governance, and large-asset managers making a play for smaller funds.
Last week, asset manager BlackRock Inc, which has some $1 trillion under management, agreed to buy hedge fund manager R3 Capital Management LLC, which runs $1.5 billion in credit strategies.
