HF Redemptions May Increase in 2025 — Evening Brief – 01.03.25
Hedge fund redemptions remain low but may increase in 2025, as indicated by SS&C Technologies Holdings’ GlobeOp’s Forward Redemption Indicator. The December reading reached a 2024 high of 3.54%, up from 2.91% in November as investors may be locking in profits following strong returns in 2024 or withdrawing due to underperformance in specific strategies.
The indicator represents the sum of forward redemption notices received from investors in hedge funds administered by SS&C GlobeOp on the SS&C GlobeOp platform, divided by the assets under administration at the beginning of the month for SS&C GlobeOp fund administration clients on the SS&C GlobeOp platform.
Nevertheless, the figure was lower than the 10-year average of 4.27% for the period, as “investors assessed market opportunities and refined asset allocations for the upcoming year,” said SS&C Technologies chairman and CEO Bill Stone.
Despite strong equity market performance over the past two years, SS&C anticipates strong asset retention this year, citing potential economic headwinds creating opportunities for hedge fund returns. “This shifting landscape provides fertile ground for compelling hedge fund risk-adjusted returns, and we anticipate strong asset retention heading into 2025,” added Stone.
Forward redemptions as a proportion of SS&C GlobeOp’s assets under administration have markedly decreased since peaking at 19.27% in November 2008. The redemption notices provide insight into the prospects of 2025, as the majority of hedge fund withdrawals occur 30 to 90 days following receipt of the notification.
Statistics indicate that Citco, another hedge fund administrator, claimed that cash inflows were expected to conclude the year in positive territory, with net new inflows amounting to $500 million through November following to $8.1 billion in redemptions.
According to hedge fund data provider PivotalPath, main hedge fund indices all notched positive gains in November, as managers across all strategy types profited from the post-election “Trump Bump” that saw U.S. stocks and the dollar soar. PivotalPath’s main industry-wide Hedge Fund Composite index rose 2.1% last month to drive year-to-date returns into double-digit territory, at 10.7%.