Investors Pull More Money Away From Hedge Funds

Investors took more money away from hedge funds in July when they asked for $7.4 billion back, underscoring their frustration with an industry that has long promised to make money in all markets but is currently delivering only middling returns.

Reported by Svea Herbst-Bayliss, July’s redemption requests were up sharply from the $4.2 billion pulled out in June, according to data released by BarclayHedge and TrimTabs Investment Research on Tuesday.

That leaves hedge funds industry assets at roughly $1.87 trillion, down 23 percent from their peak four years ago before the financial crisis hit, the research report found.

“We’ve seen a notable reversal in hedge fund industry fortunes during the past year,” said Sol Waksman, founder and president of BarclayHedge.

This is troubling news in an industry dwarfed in size by the mutual fund industry but able to attract some of the world’s savviest investors with the promises of big paychecks and more investing freedoms. Similarly big name investors including pension funds and wealthy individuals have long been attracted to hedge funds because their managers can short, or bet against a security, thereby having more tools at their disposal to deliver better returns.

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