Investors pulled close to a net $150 billion from hedge funds in December in spite of moves by dozens of funds to halt or suspend redemptions.
The record figure, equivalent to about 10 per cent of industry assets, extends the run of outflows to four consecutive months and has increased the total net outflow for 2008 to $200bn.
Tremont, Tudor Investments, Citadel, Highbridge, Farallon, GLG and Drake are among the hedge funds and funds of funds that have halted, restricted or suspended redemptions.
Some funds, such as GoldenTree, have told investors who want to redeem that they will receive securities instead of cash. Others have split funds in two, liquid and illiquid assets, and paid out only from the liquid assets fund. Still others have shut completely, paying out all their investors from whatever remained in the fund.
Many hedge funds are trying to remain afloat. It is unfortunate that some funds have to lock investors in or place gates on redemptions. It is likely that those managers who are starting a hedge fund in the new year will need to modify these terms so that they are more investor friendly. This will be done through blanket changes or through individual investor side-letters. How to start a hedge fund.
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