Man Down As Hedge Fund Redemptions Arrive: 25% Of Hedge Funds Industry To Follow Into That Good Night

Tyler Durden's picture

It was just yesterday that we, as it happens prophetically, said that "we fear the hedge fund space, which at last check was approaching $2 trillion in AUM, will collapse by 25% after the new year when the full carnage of the redemption requests is made public...we certainly had no idea just how pervasive the decimation within the hedge funds ranks was until we saw the mid-September results. We really, really hope the collusive short squeeze-cum-month end rally works out for the hedge fund community, because it really will be "or else." Well, as of today it is nearing "or else" for the world's largest hedge fund Man Group, which is down, yup, 25% today on, you guessed it, redemptions. There is, however, good news for all hedge fund managers reading us today: you will know whether or not you are in business next year, by this friday. As Dow Jones reports, "Friday marks a deadline for investors in many hedge funds with monthly and quarterly liquidity to say they want their capital back." In other words the pain is over, as 25% of hedge fund managers will hear their death sentence in 48 hours and the painful expectation of the inevitable ends.

Man Down:

More from Dow Jones:

The hedge fund industry is braced for a new round of redemptions after two months of poor performance and growing investor desire to move money into cash. The world's largest listed hedge-fund manager, Man Group PLC (EMG.LN), stoked fears of another industry meltdown Wednesday when it reported a net $2.6 billion was pulled from its funds between June 30 and Sept. 26 . It lost a further $1.5 billion from fund losses and $1.9 billion from the effect of a stronger U.S. dollar when accounting for euro- and Australian dollar-denominated funds. Its GLG unit, acquired last year, posted particularly large outflows. Man Group shares fell as much as 25% in London.

 

Aberdeen Asset Management PLC (ADN.LN), a U.K. fund manager with about GBP26.2 billion of its GBP176.9 billion in alternative investment strategies, Monday said those funds lost about GBP2.2 billion between June and August from redemptions and performance losses. Despite volatile markets this year, redemptions have been relatively subdued for most hedge funds, but high-profile losses over the summer and the deepening euro-zone debt crisis and economic gloom could send investors toward the exits. Most large managers of long-only equity and bond funds posted outflows last week, data provider EPFR Global said Monday, highlighting how investors are taking risk off the table