BizAnalyst Network

Deadline may prompt hedge fund withdrawals

Deadline may prompt hedge fund withdrawals

Skittish investors may begin pulling their money back from hedge funds tomorrow.
As investors run away from risk, fund managers expect to see a pile of redemption notices tomorrow, the bailout deadline for those who want out by the end of the third quarter, Reuters reported.

That’s because managers typically require an exit notice at least 45 days ahead of time before returning cash to investors.

Market-neutral strategies, which hold long positions in undervalued securities and short overvalued stocks, are now seeing losses amidst and up-and-down stock market, prompting managers’ expectations for redemption calls.

However, the volume of the hedge fund exit depends on an investor’s exposure to the funds, according to Stefan Greenberg, a certified financial planner and managing director at Lenox Advisors Inc., a New York wealth advisory firm.

“We haven’t had any calls to liquidate from hedge funds unless they’re close to reaching their time goal,” he said.

“There’s a specific type of investor who goes into hedge funds, and they make up only a portion of our asset allocation.”

Investors may want to hang in through the losses for now, too.

“Certain sectors do well in certain times of the year, but throughout the long-term, if you stay with that investment, it’ll bring positive returns,” he added.

full article