SS&C GlobeOp: Forward Redemption Indicator Rises to 4.90% on Seasonal Factors

Nov 20 2015 | 6:54pm ET

The pace of hedge fund exit requests quickened in November despite rebounds in global markets during the preceding month, according to new data from SS&C GlobeOp.

The SS&C GlobeOp Forward Redemption Indicator, a metric used to gauge redemption requests from hedge funds, measured 4.90% in the November period, up from 2.96% in October and 3.79% in September. The reading was the highest since December 2014’s 5.87%, illustrating the seasonal uptick in redemptions that occur this time of year. 

"The months of November and December typically show the highest readings of the year for our Forward Redemption Indicator due to year-end rebalancing,” said Bill Stone, chairman and CEO of SS&C Technologies. “Looking at the comparison on a year-over-year basis, the November 2015 redemptions of 4.90% were actually lower than 5.05% for November 2014 and, in fact, were the lowest of any November since 2011. This result is consistent with other recent data indicating an improving underlying trend in overall hedge fund allocations, even as investors rebalance their portfolios."

The indicator, published on the 15th business day of every month, represents the sum of forward redemption notices received from investors in hedge funds administered by SS&C GlobeOp, divided by assets under administration at the beginning of the month. It is useful in measuring the pipeline of hedge fund investors asking for their money back, which are usually received 30-90 days in advance of the redemption date.

Decreases in SS&C GlobeOp’s indicator generally reflect increasing confidence in hedge fund allocations, while increases suggest the opposite.

The indicator reached a high of 19.27% in November 2008 and a low of 1.85% in January 2012. 

Windsor, CT-based SS&C’s clients represent about 10% of assets invested in the hedge fund sector. Founded in 1986, the company provides investment and financial software-enabled services to more than 10,000 financial services organizations who manage an aggregate $44 trillion in assets.

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