Money managers under the microscope
It just gets worse for funds of hedge funds
Even as overall outflows from hedge funds slow, redemptions from fund of hedge funds are accelerating.
Investors pulled out $85 bln from funds of hedge funds in Q1, up from $50 billion in Q4, meaning in the first three months of the year they accounted for majority of industry outflows.
Time lags may be a factor — funds of hedge funds often put in redemption requests on underlying funds long before they have to pay out to their own investors.
But the Madoff scandal, in which several funds of funds were caught up, still overshadows the industry.
“Some people looked closely (at Madoff) and missed the structural weaknesses, or for one reason or another didn’t look closely enough and because of performance accepted those types of things, when with the benefit of hindsight they shouldn’t have,” said HFR President Ken Heinz.