LONDON Dec 20 Client demands to pull money out
of hedge funds rose to their highest level in more than three
years in December, at the end of a year that has left many
investors disappointed with performance.
Hedge fund administrator SS&C GlobeOp's forward redemption
indicator, a monthly snapshot of clients giving notice to
withdraw their cash as a percentage of assets under
administration, measured 6.19 percent in December.
This was the highest level since September 2009 and almost
double the level just two months ago. A year ago, the index
measured 4.58 percent.
After a tough time during the credit crisis, hedge funds
have managed to avoid a third year of losses in five in 2012,
but their gains have lagged stock market indexes.
The average hedge fund was up 4.89 percent in the first 11
months, according to Hedge Fund Research's HFRI index, compared
with a 14.94 percent total return from the S&P 500.
Bill Stone, chairman and chief executive of SS&C
Technologies, said fears that gains from hedge fund portfolios
could be taxed at higher rates in the United States may have
driven the increase.
"December is ... the final chance to change your tax
liability. People are generating the cash to be able to make
their quarterly estimated tax payment. A lot of people are going
to make tax-influenced decisions," he said in an interview.
Stone said the numbers did not mark the end of inflows into
the hedge fund industry. "The structural problems of pension
plans and retirement plans means everyone is starving for
The demand for redemptions hit a high-water mark in 2008,
with the GlobeOp Forward Redemption Indicator hitting 19.27
percent in the wake of the collapse of U.S investment bank
Lehman Brothers. Levels have not topped 10 percent since
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.