LONDON (Reuters) - Redemption requests by hedge fund clients gathered pace in November as investors kick-started the traditional year-end evaluation of manager performance after a 2011 blighted by unprecedented volatility and erratic returns, recent data shows.
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, measured 3.44 percent this month, up from 2.51 percent in October.
“We expect fund redemption requests to increase as year-end approaches,” GlobeOp Financial Services SA GO.L Chief Executive Hans Hufschmid said, adding the volume of notices to call in cash this month was similar to the 3.22 percent seen in November 2010.
With annual returns in many popular strategies close to zero or even dropping into negative territory, many hedge funds face a particularly stressful season of portfolio rebalancing.
The average hedge fund is down 3.5 percent in the 10 months to then end of October, according to Hedge Fund Research, with equity and global macro funds losing 5.21 percent and 3.32 percent, respectively.
“January is typically the largest month as investors rebalance their portfolios ... but there are no signs of unusual investor activity,” Hufschmid said.
Investors gave notice to withdraw 4.59 percent in December 2010, compared with 4.01 percent in June, the highest monthly snapshot of exit requests seen in 2011 so far.
Forward redemptions as a percentage of GlobeOp assets under administration have trended significantly lower since hitting a high of 19.27 percent shortly after Lehman Brothers collapsed in November 2008.
Reporting by Sinead Cruise; editing by Laurence Fletcher and Andre Grenon