« Sun Microsystems Ersteinschätzung | Main | U.S. Sept. ISM services index at lowest level since March »
Report of hedge fund outflows was wrong, firms say
By Martin | October 4, 2007
A report on big outflows and redemptions from hedge funds in July was wrong, according to TrimTabs Investment Research and the Barclay Group, the two firms that compiled the estimate.
Rather than a net $32 billion leaving hedge funds that month, $39.1 billion flowed into the business in July, the firms said on Wednesday. In August, TrimTabs and Barclay Group estimated $8.9 billion of inflows into the $1.9 trillion industry.
Hedge fund performance wilted toward the end of July and deteriorated further in August amid credit market turmoil. That sparked fears of big redemptions by some hedge fund investors.
The July outflows that were estimated by TrimTabs and Barclay Group in early September seemed to confirm such concerns. At the time, TrimTabs said de-leveraging and risk reduction by funds of hedge funds was a major cause of the turbulence in credit and equity markets in July and August.
However, on Wednesday the two firms said the July estimate was calculated incorrectly and apologized. The new data suggest that the impact on hedge funds wasn’t as bad as some had feared.
“We apologize for the incorrect hedge fund flow estimates for July,” said TrimTabs Chief Executive Officer Charles Biderman. “The monthly hedge fund flow data is a new service and the changes we made to our methodology will ensure that our current and future estimates are as accurate as possible.”
The estimates for July hedge fund flows were incorrect for two reasons, the firms explained.
Adjustments were not made for the reporting of funds of hedge funds, which tend to report flows with a significant lag because they have to consolidate returns from their underlying managers first.
Also, funds were included in the estimate that updated their performance but not their assets under management. As a result, those funds that posted positive returns were incorrectly reported as posting outflows equal to their asset growth from performance, TrimTabs and Barclay Group said.
Still, the impact of credit market turmoil this summer on hedge funds was evident in August data compiled by the firms.
The $8.9 billion August inflow was the lowest since $7 billion flowed into hedge funds in January, they estimated. Fixed-income hedge funds posted the biggest outflow in August, losing an estimated $1.7 billion, they noted.
“Many investors were probably nervous about putting fresh cash to work until they could assess the fallout from the subprime mortgage mess,” said TrimTabs President Conrad Gann
Topics: Uncategorized | No Comments »
Trackback URL for this post: http://www.tradingpattern.net/2007/10/04/report-of-hedge-fund-outflows-was-wrong-firms-say/trackback/
Comments
You must be logged in to post a comment.