DealZone

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?)

More worryingly, clients who contributed to the report are convinced that certain hedgies are playing fast and loose:

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.

Now, according to this Bloomberg report, Cerberus sent a letter to clients warning them that it could take "years" to meet all the redemption requests, which have stacked up since the firm imposed gates in December.

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.

Only last week Spanish bank BBVA said it would close down its alternative investment businesses, including hedge funds, and give investors their money back.