Hedge Fund Outflow : Investors pullout of hedge funds charged in mutual fund scandals
  Hedge Funds - Mutual Fund Scandals - Hedge Fund
Free Registration for Hedge Funds and Investors
HedgeCo.Net - Online Hedge Fund Database and Community

Sign up for our
Hedge Fund Newsletter


Fund of Funds, Hedge Fund of Funds, about fund of funds, hedge funds HedgeCo Premium Fund News

Industry Overview New to Hedge Funds FAQs Login Hedge Fund Glossary Hedge Fund Articles

Hedge Fund Investors Abandon Funds Accused in Mutual Fund Scandals

Mutual fund scandal and hedge funds

New released survey shows that many hedge fund investors are fleeing from hedge funds charged in the mutual fund trading scandals. Late last year, New Jersey based hedge fund manager, Canary Capital Partners LLC agreed to pay $40 million settlement to New York without admitting any wrongdoing, following market timing and late trading charges by the New York State Attorney General Eliot Spitzer.

Hedge fund outflow due to mutual fund scandals

According to Hedge Fund Research Company Inc. of Chicago, [HFR] those funds charged in the illegal trading and market-timing activities saw a net outflow of US$1.8 billion, from their portfolios in 2003. Such assets walked out of the door during the fourth quarter when such allegations surfaced. Those withdrawn assets represent over half of the management assets of the companies involved in the mutual fund scandals.

Hedge Fund Research of Chicago also said that Investors also pulled out $3.04 billion from hedge funds charged in market-timing illegal trading from October through December. Such loss more than offset the $1.25 billion of new assets, which those funds gained in during the first three quarters of 2003.

Federal and State investigators also expanded the investigation including some large hedge funds, and investment professionals. Commenting on the magnitude of investor asset pull-out, Joshua Rosenberg, the President of HFR said the degree of the pull-out suggests that hedge fund investors are concerned as federal and state authorities subject market timing strategies under a microscopic view, other hedge funds employing such strategy may find it difficult to operate under such conditions. Rosenberg said, “There's not a huge tolerance of that kind of risk in the hedge-fund world.”

Total hedge fund assets


Hedge funds tracked by HFR gained an average of 15% in 2003, the average hedge fund returned about 17% in 2003. The broader hedge funds gained about $75 billion in 2003, bringing total hedge fund assets to over $750 billion.

Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net

HedgeCo.Net is a premier hedge fund database and community for qualified clients only. Membership on www.hedgeco.net is FREE and EASY!

Related Reading:

What is a Hedge Fund?


SEC (Securities and Exchange Commission) turns its Attention to Mutual Fund Brokerage Scandals


Mutual Fund Scandal Fails To Derail Gains By Stock Funds


ETF’s Popularity Rises Amidst Mutual Fund Scandals


 New Mutual Fund Product launched Utilizing Hedge Fund Strategies