Investors Withdraw $40 Billion From Hedge Funds in October

Investors withdrew more than $40-billion from hedge funds in the month of October, bringing assets under management for the global industry to levels last seen at the end of 2006.

Combined with an additional $115-billion in performance-based asset losses, the industry’s capital base fell by $155-billion, Hedge Fund Research said Thursday. This follows a difficult third quarter that saw global hedge fund capital decline by $210-billion.

Kenneth J. Heinz, President of Hedge Fund Research said:

Performance of the hedge fund industry has declined over 17 percent since October 2007, making the current performance drawdown the largest in history. The industry has now registered five consecutive months of losses, another inauspicious first.

He predicted that consolidation will continue into 2009 as investors across all asset classes liquidate assets and move into cash.

The largest capital reductions in October came from funds of hedge funds, which investors took more than $22-billion out of. They have underperformed the broader industry so far in 2008, with the Hedge Fund Research fund-of-funds index down 18.5% versus a loss of 16% for its weighted composite index.

Comments

[notsosmart:]

who needs hedge funds? the wealthy chasing more wealth.let them collapse to zero.

2008 Nov 21 10:00 AM

[silverslut:]

The big question that is the key to the whole market these days, is when will the hedge fund deleveraging come to an end? When will it slow, and when will it stop. Does anybody have access to data that answers these questions?

2008 Nov 21 11:54 AM