Net Redemptions Top $10 Billion In October

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.


In Depth

Debunking Conventional Investment Wisdom

Feb 8 2017 | 3:22pm ET

Due diligence in the hedge fund world has long involved some combination of the...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

iCapital Network: The Trump Effect On Direct Lending

Feb 23 2017 | 4:21pm ET

The arrival of the Trump Administration has raised questions among private debt...

 

From the current issue of