Turbulence prompts mass exodus from hedge funds

INVESTORS pulled out around five times more cash from hedge funds in the month to 1 October than in the prior period, during one of the most turbulent few weeks for stock and bond prices since the 2008 financial crisis dampened appetite for risk.

Gross outflows, as measured by the GlobeOp Capital Movement Index, which tracks monthly net subscriptions and redemptions from hedge funds running around $170bn (£109bn) of assets, hit 3.17 per cent last month, the fourth time gross exits topped three per cent in 2011.

Withdrawals from hedge funds had fallen to 0.58 per cent in the month to 1 September, the lowest level since before the credit crunch as investors swapped safe havens like gold in favour of portfolios expected to make money in all seasons.

GlobeOp’s index showed hedge fund inflows were still net positive, rising 0.31 per cent in the month to 1 October on the back of a 3.48 per cent gross influx of capital.