Laurence Fletcher of Reuters is reporting that hedge fund withdrawals have reached their highest level since 2009, during the midst of the housing crisis.Net outflows from hedge funds, as measured by the GlobeOp GO.L Capital Movement Index, which tracks monthly net subscriptions to and redemptions from funds managing around $187 billion (120.49 billion pounds) in assets, were 1.17 per cent of that total during the month to July 1.
The withdrawals compare with net inflows in each of the previous five months and were the highest level of net outflows since October 2009, when clients pulled out 3.76 per cent.
This is more bad news for hedge funds, who have been outperformed by bond funds this year. CNBC’s John Melloy reported earlier today that Bank of America Merrill Lynch’s global diversified hedge fund composite index returned just 1.3 per cent in the first half, which was significantly below the S&P 500’s 8.3 per cent gain. Melloy noted that David Einhorn’s Greenlight Capital was one such underperformer.
With hedge funds not gaining money as rapidly as hoped, investors are starting to pull their money out. This is a trend that hedge funds will want to reverse, quickly.