Record Redemptions, Poor Performance Sap Hedge Fund Assets

Jan 21 2009 | 4:24pm ET

Two years’ worth of growth in the hedge fund industry was obliterated last year as investors fled, saddling the already hard-hit asset class with the biggest outflow in history.

Hedge funds managed just $1.4 trillion on New Years Day, a 27% decline from the middle of last year, when the industry peaked at $1.93 trillion, Hedge Fund Research reports. Of the vanished $525 billion, record investor redemptions in the fourth quarter were responsible for $152 billion of the lost assets. All told, 2008 outflows totaled $155 billion, only the second time ever that the hedge fund industry has contracted since at least 1990.

“Investor risk aversion remained at historically extreme levels through year-end, even as implied and realized asset volatility moderated,” Kenneth Heinz, president of HFR, said.

The top 10% of hedge funds in the HFRI index returned an average of 40% last year, while the bottom 10% lost an average of 62%. But investors did not discriminate in running for the exits. Macro funds were one of the few to enjoy a relatively strong year, but investors still pulled $31 billion from the strategy. Short-biased funds and systematic diversified strategies posted double-digit returns, but still investors took their money and went home.


In Depth

Fundraising for Mid-Sized PE Funds: Should You Use a Registered B/D?

Dec 6 2016 | 7:18pm ET

When does a fund sponsor need to use a registered broker/dealer when raising capital...

Lifestyle

Trump Attends 'Villains and Heroes' Costume Party Dressed As...Himself

Dec 5 2016 | 11:16pm ET

U.S. President-elect Donald Trump attended a "Villains and Heroes" costume party...

Guest Contributor

A Hard Look At Your ‘Soft’ Hedge Fund Marketing Information

Dec 8 2016 | 9:03pm ET

Conventional wisdom holds that due diligence examines quantitative as well as qualitative...

 

From the current issue of

Since the inception of Modern Trader, a core editorial theme has centered on the wisdom and power of crowds. Editorial emphasis has focused on companies and projects engaged in the collection and analysis of information. 

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR