Hedge fund exit requests running at 2011 high

LONDON Fri Jul 1, 2011 12:42pm EDT

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LONDON (Reuters) - Investors are asking for more of their money back from hedge funds in June than in any other month in 2011, data showed on Monday, as fund returns hit by May's commodity rout shake client confidence.

The GlobeOp Forward Redemption Indicator -- a monthly snapshot of clients giving advance notice they want their money back as a percentage of GlobeOp's GO.L assets under administration -- rose to 4.01 percent from 3.92 percent in May.

This represents the biggest month of withdrawal requests since December 2010, and follows a sharp rise in exit requests in May -- to 3.92 percent from 2.45 in April -- less than two weeks after commodity prices tumbled.

GlobeOp, a hedge fund services firm, took its monthly snapshot of hedge fund redemption requests on June 15.

Many hedge funds positioned for rising prices were caught off guard in May when markets sold off quickly, hitting returns and squeezing new money flowing into funds to its lowest level in two years, according to GlobeOp's Capital Movement Index.

Hedge funds lost 1.3 percent in performance terms during May, according to Hedge Fund Research, while the S&P 500 .SPX shed 1.4 percent, with some big-name funds losing much more.

Much of the damage came during the commodities sell-off early in the month. Energy-focused fund BlueGold posted double-digit losses in the first week of May, while Clive Capital lost just over 9 percent.

Hans Hufschmid, GlobeOp's chief executive officer, played down any role weak returns in May had in raising June's redemption requests, saying the total was likely boosted by clients wanting to withdraw money at the half-year point, when many re-allocate their investments.

"It's hard to make an argument that people are worried or taking money out because of May performance," he told Reuters.

Most redemption requests in the index were for one-month and under notice periods, reflecting how a rise in one-to-two month requests in May had rolled over into June, though two-to-three and three-month plus requests also rose slightly.

The figures are still well below the record 19.27 percent in November 2008, in the wake of the collapse of Lehman Brothers.

(Editing by David Cowell)

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