May notifications for hedge fund redemptions rebounded slightly but continue to trend lower than the levels seen at this time last year, according to new research from fund administrator SS&C GlobeOp.
The company’s widely-followed Forward Redemption Indicator, a metric used to gauge investor withdrawals from hedge funds, for May 2017 measured 3.08%, up from 2.41% in April.
“Taking into account seasonality, SS&C GlobeOp’s Forward Redemption Indicator for May 2017 of 3.08% continues this year’s favorable trend in redemptions,” said Bill Stone, chairman and CEO of SS&C Technologies. “It represents a sharp decline from the 4.38% reported a year ago for May of 2016, as well as compared to historical averages for the month of May.
“This is the fourth consecutive month of year-over-year gains for the Forward Redemption Indicator and, together with other recent data points, adds to the improving outlook for the hedge fund industry,” he added.
SS&C GlobeOp’s Forward Redemption indicator is published on the 15th business day of every month. It represents the sum of forward redemption notices received from investors in hedge funds administered on the SS&C GlobeOp platform, divided by assets under administration at the beginning of the month, and is useful in measuring the pipeline of hedge fund investors asking for their money back.
Decreases in the indicator generally reflect increasing confidence in hedge fund allocations, while increases suggest the opposite. The indicator reached a high of 19.27% in November 2008 and a low of 1.85% in January 2012.
Windsor, CT-based SS&C’s clients represent about 10% of assets invested in the hedge fund sector. Founded in 1986, the company provides investment and financial software-enabled services to more than 10,000 financial services organizations that manage an aggregate $44 trillion in assets.