Friday, 25 July 2014
Last updated 6 hours ago
Dec 11 2012 | 10:24am ET
Hedge fund investors yanked more than $10 billion from the industry in October—although they seem to be picking their spots in the right places.
Total redemptions were $10.8 billion in October, TrimTabs Investment Research and BarclayHedge report, or 0.6% of total industry assets, which stand at $1.8 billion. The outflow swamped the combined $9.8 billion inflow enjoyed by the industry in August and September.
"From a cash-flow standpoint, the hedge fund industry has been losing ground for the past year," BarclayHedge's Sol Waksman said. "October's redemptions pushed year-to-date outflows to $13.7 billion and 12-month outflows to $22.9 billion."
But investors aren't stupid, the report shows. They are sticking with the best-performing hedge funds and fleeing the worst.
"Hedge fund investors are doing fine if they're buying into the best-performing funds," TrimTabs founder Charles Biderman said. "Also, the massive outflows from the lowest-performing funds show investors are losing patience with the subpar returns that have plagued the industry over the past year."
Indeed, the top 10% of hedge funds by performance—median return of 23.5% over the past 12 months—have actually taken in $4.8 billion in new cash. The worst 10%—median loss of 11.2%—have lost $6.3 billion to redemptions. The bottom two quintiles of hedge funds in terms of performance have suffered $25.2 billion in outflows, while the top two quintiles have lost just $3 billion.
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…