Telegraph.co.uk- Hedge funds suffered their worst month of redemptions in seven years in July after some $55bn (£27.4bn) was withdrawn by jittery investors concerned by lowered returns amid the global credit crunch.
The sector, until recently seen as one of the most invincible within the financial community, took a heavy battering as investors redeemed funds when the markets began to fall.
In total, withdrawals for all hedge funds totalled $55bn in July, based on data from the TrimTabs and BarclayHedge reports, with inflows in the same month of $23bn.
But the amounts withdrawn are likely to pale in comparison when figures for August redemptions are released early next month.
The TrimTabs report warned that the August position could be even greater, given the heavy losses suffered by many funds at the height of last month’s market collapse.
Hedge funds, which tend to be more focused and often invest via a specific, computer-linked strategy, bore the brunt of the losses during the summer’s equity rout.
Initial falls began in hedge funds which had invested in sub-prime mortgages and distressed debt, but soon widened to encompass more general computer-based quantitative funds.
But Charles Biderman, of TrimTabs, believes the fall in investment in July could actually have been to blame for the significant stock market falls that were the hallmark of August.
