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Hedge fund confidence improving, figures show PDF Print E-mail
News - Latest
Tuesday, 26 April 2011 12:08

Investor confidence in hedge funds improved in April even as worries over the crisis in Libya and Japan's earthquake bruised global markets, the latest data from hedge fund services firm GlobeOp shows.

Contradicting a reputation for fleeing funds at the first sign of market trouble, the newly launched Forward Redemption Indicator showed hedge fund investors were broadly sticking to allocations and even cancelling older requests to pull out cash.

The GlobeOp index, which tracks the volume of clients globally giving advance notice to withdraw money as a percentage of GlobeOp's assets under administration, fell to 2.45% in a snapshot taken on April 15, some 0.81% lower than the last reading taken on March 20.

‘The indicator is near its all time low when measured over the past three years and reflects continued improvement in investor confidence,’ said Hans Hufschmid, chief executive officer of GlobeOp Financial Services.

GlobeOp's data covers around $159 billion (£96 billion) of hedge fund assets under administration, or around 8 to 10% of the global hedge fund industry.

The GlobeOp Forward Redemption Indicator hit an all time high of 19.27% in November 2008 in the wake of the collapse of US investment bank Lehman Brothers.

Unlike subscriptions, redemption notifications are typically received 30 to 90 days in advance of the redemption date. Investors may, and often do, cancel requests if they feel more comfortable about the markets by the time the payment date falls due.

The decline suggests investor confidence in hedge funds is returning following the financial crisis. Man Group, the world's biggest listed hedge fund manager, said in March it had started to win back clients after two years of outflows.

A source at GLG Partners, a unit of Man, told Reuters it was mulling the closure of its popular Market Neutral fund to new investors following a rapid rebound in client inflows, which it feared could compromise its performance record.

Backing this trend, another GlobeOp index published earlier this month showed investors largely held back from withdrawing funds even as global stocks tumbled following the March 11 earthquake and tsunami in Japan.

 

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