Investors Yank $9 Billion From Hedge Funds

Dec 13 2011 | 1:18pm ET

Investors pulled more from hedge funds than they have in more than two years in October, halting the industry's rise towards its pre-financial crisis asset level.

Clients redeemed some $9 billion in October, nearly three-and-a-half times as much as they pulled in September, according to BarclayHedge and TrimTabs Investment Research. The redemptions are the largest for the hedge fund industry since July 2009, when $17.8 billion was returned.

"Investors seem to have lost patience with lackluster hedge fund returns," BarclayHedge's Sol Waksman said.

It certainly took them long enough: Hedge funds have been down for most of the year, despite an uptick in October. The average hedge fund is down by about 4% this year, according to several industry indices.

October's redemptions cut the global hedge fund industry's size to $1.66 trillion, its lowest level in almost two years.

Long/short hedge funds, among the hardest-hit in terms of performance, took the biggest hit in terms of assets, with $2.6 billion in redemptions. Macro funds suffered $1.8 billion in redemptions while emerging markets funds lost $1.6 billion.

By contrast, multi-strategy funds brought in $1 billion in new capital.

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