Hedge Fund Flows
FiNTAG is one of my new must-reads. About half a dozen hedge-fund related bits of commentary every morning. The product of some number of anonymous, British hedgies. Hard to deny the conservative political bent, but, when delivered with enough wit and acidity, I find it palatable enough.
A particular post (scroll down, FiNTAG doesn’t do permalinks!) regarding the growth of erstwhile fund administration bozos GlobeOp received far too little attention. Not so much that GlobeOp has amassed 100 BN USD despite a failed pre-credit crunch IPO and serious lawsuit from former client Archeus. No, but that GlobeOp witnessed net negative outflows on behalf of its clients in January.
This means that some tiny sector of the hedge fund world shrunk. Despite over 200 BN USD in growth last year. The timing is interesting as well, given that some of the worst performance was reported over the summer and then in November and December. Too early and too late respectively to be reflected in January’s activities given a hypothetical 90 day lockup. If I was really intelligent, I would probably double check my assertion regarding common lock up periods. I would also consider tax and other non-performance implications of a January redemption.
Still, the most important thing to take away from this is that it’s possible for the size of the hedge fund industry to shrink. It’s fairly easy to imagine it rolling along, katamari-like, amassing more and more money as institutional asset managers allocate more and more funds to alternatives. We can now see at least some slight evidence that not every investor believes hedge funds to be the ultimate vehicle for generating returns.
I’d like to see if where the money is coming from if it’s going to hedge funds. Are investment pools just growing? or is money being deallocated from certain sectors? And where is it s going if it’s leaving hedge funds? What asset class seems more attractive right now? I highly doubt net negative flows, in this environment, could be chalked up to profit-taking.
Unless you invested with Paulson.
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