The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

Hedge funds: Opportunities in redemptions

When it comes to retaining clients, hedge funds can’t win at the moment.

Those with good performance are suffering from redemptions as investors are forced to rebalance portfolios as equity investments decline, or to redeem hedge fund allocations simply to free up cash to be put to use elsewhere. In October and November, more than $80 billion left the hedge fund industry. Some private banks, however, say the forced redemptions of some investors are offering opportunities to high-net-worth individuals.

Dennis Geelan, director of investment solutions at Credit Suisse’s private bank in London, says that there are select opportunities. "Many hedge funds have delevered by now and are well incentivized to work even harder to retain investors and get performance back above the high-water mark and make performance fees again." The fact that there are no performance fees to be paid to some managers given the drop off in performance is also viewed as a reason to invest by some opportunistic high-net-worth clients, adds Geelan.

Patrick Reid, director with Citi Global Wealth Management Alternative Investments, says that, for those managers that will not have performance fees this year, it is essential to carry out thorough due diligence. "How are those funds going to retain staff in 2009 and beyond, for example, if incentive fees have gone? Low fees do not equate to a great manager."

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree