Withdrawal limits remain despite hedge funds' rise
When markets slid late last year, many hedge fund managers barred or limited frantic investors from withdrawing money. Yet now that there has been a rebound, a lot of those restrictions are still in place.
Fund managers argued that last year's clampdown was necessary to protect remaining investors from the unloading of hard-to-sell assets at fire-sale prices.
Six months later, things look a lot different: Hedge funds as a group were up on average 9.8% this year through the end of May, compared with a decline of 19% for 2008, said data tracker Hedge Fund Research Inc.
The market rebound means many assets are easier to sell, and investors are increasingly demanding money back.
Among funds that continue to tie up investor money are Chicago's Citadel Investment Group and New York's Harbinger Capital Partners, as well as London-based GLG Partners and Polygon Investment Partners. These funds plan to release at least some money in coming months, people familiar with the matter said.
"There is a feeling that some managers are sitting on restrictions in order to sustain their business" as opposed to acting in clients' best interests, said Stephen Oxley, European head of Pacific Alternative Asset Management, an Irvine, California, fund of hedge funds manager.
Investors said continued restrictions may be justified if the assets remain illiquid. "But you have to look very closely that it hasn't been done for other reasons," Oxley said.
Some managers said continuing restrictions typically relate to assets that remain tricky to sell. GLG is in the process of returning some previously restricted money, particularly in funds focused on areas that have become easier to sell in recent months, a person familiar with the matter said. The firm plans at the end of this month to end the freeze on withdrawals on the $1bn (€708m) GLG Market Neutral fund, which focuses on convertible bonds.
-- Write to Cassell Bryan-Low at cassell.bryan-low@wsj.com
This story can be read on www.wsj.com
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