Hedge fund exits at 3-year high in December-data

LONDON Fri Jan 11, 2013 4:00pm EST

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LONDON Jan 11 (Reuters) - Hedge funds suffered their biggest month of withdrawals for more than three years in December, data showed on Friday, after a year of mediocre returns prompted disatisfied investors to move their money out.

Hedge fund administrator SS&C GlobeOp's Capital Movement Index, which tracks monthly net subscriptions to and redemptions from funds, measured minus 2.58 percent last month, representing the biggest monthly outflow of cash seen since October 2009.

Hedge fund investors, who pay money managers high fees in the hope of outperforming markets, are reeling from another disappointing year in which the average fund lagged.

In 2012 the typical hedge fund generated a return of 6.2 percent compared with a 16 percent rise in the S&P 500.

However, a higher gross monthly inflow figure recorded in December suggested a sizeable amount of money is also being moved from one fund manager to another, instead of out of the industry altogether.

Monthly gross inflows topped 3 percent last month for the first time since April, while the gross monthly outflow of 5.59 percent was also the highest level since October 2009.

GlobeOp's forward redemption indicator, a monthly snapshot of clients giving notice to withdraw their cash as a percentage of assets under administration, also hit a new three-year high in December.

Around 10 percent of the global hedge fund industry, worth $187 billion of hedge funds under administration, is covered by SS&C GlobeOp's data.

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