Money managers under the microscope
BNY Mellon’s look at the “Hedge Fund of Tomorrow” has gained some column inches for its confirmation that wealthy Europeans have proven decidedly disloyal to the hedge funds who lined their pockets during the good times.
Rapid exits from European HNWs have apparently created an industry which is more American, and more institutional. BNY Mellon and research firm Casey Quirk expect assets to recover, and more than double within 4 years. Small beer given previous growth rates, but beggars can’t be choosers.
I was most struck though by another line in the 50-page report.
Investors were asked what they would consider the greatest challenge for hedge funds going forward, and it is clear that the installation of suspended redemptions or investment gates has riled the clients something rotten.
The measures may be entirely legal, but many investors think their hedge fund managers have been ‘high-handed’ and ‘abrupt’. (I do wonder if they expected polite advance notice of a block on redemptions to give them ample opportunity to err… pull all their cash out?)
Embattled Cerberus Capital Management, a private-equity firm named for the mythological three-headed dog that guards the gates of Hades, has been overwhelmed by clients seeking to withdraw money from its $2 billion hedge fund, Cerberus Partners.
Website FINAlternatives said that fund investors representing 17 percent of the assets wanted to withdraw their money in December, the most recent month for which statistics are available. Now, with Cerberus’s investments in Chrysler and GMAC going bad and unemployed investors needing to tap more funds, that figure may be heading higher.
Another day and another report of a company looking to exit its hedge fund operation.
According to a report in today’s FT, Germany’s Commerzbank has put its $900 million fund of hedge fund manager Comas up for sale, although it may close it down if no buyer is found.
By Alexander Smith
If redemptions are getting the better of you and you thought your industry was about to disappear, you may be amazed to hear there are still those wanting to start their own hedge funds.
An email from Financial Technologies Forum LLC brings news of a new course in New York next month giving you everything you need to get going.
Data from Hedge Fund Research shows they returned 0.39 percent in January, having lost 18.73 percent in 2008, although they gained 0.21 percent in December.
The start of a revival in hedge fund returns? Well, maybe, and maybe not.
One explanation is that returns are just bouncing back after losses were exacerbated by redemptions late last year.