Halfway Through Redemptions? ~ market folly

Tuesday, December 2, 2008

Halfway Through Redemptions?

Could we be halfway through the redemption cycle? That's what global wealth management firm Bernstein is postulating. After surveying the landscape of hedge funds, they believe that we are roughly halfway through the deleveraging process.

Here is some of the rationale,

"For a start, average gross leverage has fallen to 142 per cent of assets under management from about 175 per cent in 2006 and 2007. Most respondents, 63 per cent, think the hedge fund deleveraging process is at least halfway over. On average, those surveyed thought redemptions are 52 per cent complete — with the process to finish around the first-quarter of 2009. Still, about 10 per cent of respondents said they were setting aside cash for known or anticipated redemptions. Overall, cash as a percentage of total assets is now at about 31 per cent, compared to an average of 7 per cent over the past two years."

Source: FT

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