Hedge funds have spent most of the past nine months cowering behind the sofa as a horror show of mass redemptions dances across their TV screens.
Every so often they peer around the corner in the hope it is safe to come out from hiding and start the serious business of making money once again.
Fresh figures today from HFR, those diligent statisticians of all things hedgie, offer some insight into whether the closing credits of the horror flick are rolling, to be replaced by film of lambs gambolling in the spring sunshine. But only a little.
It seems that net redemptions from hedge funds slowed to a paltry $104bn in the first quarter of 2009, from a far chunkier $152bn in the final three months of 2008. And with the average fund posting a gargantuan 0.53 per cent positive return in the quarter, surely the rush for the exits will abate further from here, prompting a sigh of relief from an industry which, at $1,330bn, is down $600bn from its peak.
But the horror show is becoming more gruesome still for funds of hedge funds, where redemptions spiked to a record $85bn, HFR’s number-crunchers tell us, from $50bn last time.
Some of this divergence may simply be due to a time-lag; funds of funds need to extract their cash from underlying vehicles (not always a straightforward process) before being able to pass what remains back to the end investor.
But more ominously, the data could be evidence of the extent to which, post Madoff, investors have lost faith in the fund of fund model.
From the FoF perspective, when the current horror flick ends, the next show may be more Silence of the Lambs than gambolling lambs.