By Svea Herbst-Bayliss
After months of heavy losses, big and small clients asked funds to return $9 billion in October. That number is three times as large as the $2.6 billion (1.7 billion pounds) they pulled out in September, data from BarclayHedge and TrimTabs Investment Research show.
The dramatic jump in redemption requests shrank the industry to $1.66 trillion, its lowest level in nearly two years and well below its $2 trillion peak, the researchers said in a report released on Monday. The redemptions are the largest since July 2009 when $17.8 billion was removed.
Hundreds of hedge funds had a deadline for clients to pull out money in October and dozens of clients opted to use it after seeing five straight months of losses.
Even some of the industry’s biggest stars like John Paulson, who have hit home runs with bets against the housing market and on gold, have sunk into the red. Paulson’s main Advantage fund was off nearly 50 through the end of September and his investors had until October 31 to say if they wanted to exit.