While its true that many hedge fund investors are planning to redeem billions of dollars, the danger of those redemptions further roiling the markets is low, HedgeWorld News reports.
Anticipating a tsunami of redemptions, most hedge fund managers have already heavily sold out of positions to have ready cash on hand.
Most managers have spoken to their large investors, and most have been preparing for year-end redemptions by raising cash. Most are not sitting waiting for final numbers, said one hedge fund manager, speaking on condition of anonymity.
The redemptions are understandable, as the average hedge fund lost 15.5% through the end of last month. On average, hedge funds are facing redemptions of between 15% to 20% of assets under management.
But some managers think the requests could come in between 25% and 35%. Cem Habib, co-founder of hedge funds-of-funds Altedge Capital, said that in some cases its far worse, with redemptions decimating half of some funds assets.