Hedge fund exits tumble as investors seek refuge

LONDON Thu Nov 10, 2011 4:02am EST

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LONDON (Reuters) - Exits from hedge funds slowed by almost four-fifths in the month to November 1 than in the prior period, as demand for risk management strategies rallied on worries Europe's debt crisis could be tip-toeing towards the endgame, data shows.

Gross fund outflows, as measured by the GlobeOp Capital Movement Index, which tracks monthly net subscriptions to and redemptions from hedge funds running around $170 billion (107 billion pounds) of assets, dropped to 0.72 percent compared with 3.25 percent a month earlier.

The figure represents the lowest volume of November exits seen since GlobeOp's Index records began in 2006, Hans Hufschmid, chief executive officer of GlobeOp Financial Services said.

The sharp fall in exits resulted in the third largest net monthly inflows seen this year in November, just 36 basis points shy of the 2.41 percent high recorded in May.

"Subscriptions this month are consistent with this year's average, while the positive net flow primarily reflects low redemptions for November," Hufschmid said.

Cumulatively, the GlobeOp Capital Movement Index for November 2011 stands at 139.50 points, an increase of 2.05 points over October. The Index has advanced 14.35 points over the past 12 months.

High-profile hedge fund managers led a rebound in the performance of European hedge funds during October, but many funds remain in negative return territory as a particularly turbulent year of trading nears an end.

According to Hedge Fund Research's HFRX index, the average hedge fund globally gained 0.8 percent in October, leaving it down 7.7 percent for the year after a volatile summer that has damaged performance across the industry.

Britain's blue-chip FTSE 100 .FTSE index, in contrast, was up 8.1 percent over the month.

(Reporting by Sinead Cruise; Editing by Hans-Juergen Peters)

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