Hedge fund exit requests subdued in February

LONDON Tue Feb 21, 2012 8:25am EST

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LONDON (Reuters) - Investor demands to pull out of hedge funds rose from an all-time low last month but remain at a historically subdued level, data from hedge fund services firm GlobeOp shows, in a sign investors are not deserting the sector despite last year's mediocre returns.

The GlobeOp Forward Redemption Indicator, a monthly snapshot of clients giving notice to withdraw their cash as a percentage of GlobeOp's assets under administration, was 3.14 percent in February.

This was up from an all-time low of 1.85 percent last month, although there tend to be more exit requests in February as investors rejig their portfolios in preparation for a key hedge fund redemption date at the end of March.

A year ago the indicator measured 3.36 percent, while in February 2010 it was 4.63.

"February continues the recent trend of very low redemption levels," CEO Hans Hufschmid told Reuters.

By far the biggest jump in new redemption requests was for funds offering an exit in the next one to two months, where 2.26 percent of investors asked for their money back.

This suggests a jump in the number of investors, perhaps worried by last year's losses, planning to pull out of funds with a month or 45-ay notice period at the end of March.

"The one-to-two month period points to the end of the first quarter of the year, one of the four seasonal points at which investors readjust their portfolios and allocations," Hufschmid said.

Hedge funds lost 5.2 percent in 2011, according to Hedge Fund Research, as they battled volatile markets dominated by worries over the euro zone's debt crisis.

The loss was their second year of losses in just four years, raising questions over their ability to deliver absolute returns.

However, a rebound in markets has helped managers recover some ground this year, with the average fund up 2.6 percent in January.

GlobeOp's data covers around $173 billion (109 billion pounds) of assets under administration, or around 8 to 10 percent of the global hedge fund industry.

The GlobeOp Forward Redemption Indicator hit an all-time high of 19.27 percent in November 2008 in the wake of the collapse of U.S. investment bank Lehman Brothers, but has not risen above 10 percent since September 2009.

(Editing by David Cowell)

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