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By Benedicte Gravrand, Opalesque London:

Chicago-based data provider Hedge Fund Research, Inc. (HFR) yesterday released their statistics for the first quarter of 2009 (Q1-09). They found that investors had redeemed $104bn, or 7.4% of the industry’s total assets – this seems a lot, but it is an improvement from the Q4-08 total redemptions of $512bn.

Of the $104bn redeemed, $84bn was done so through funds of hedge funds (FoHFs) – more than the $50bn redeemed in Q4-08. FoHFs’s performance declined by 21.3% in 2008, but gained 0.47% in Q1-09. HFR believes the higher redemption level in Q1-09 is indicative of investor’s continued pressure. Also, some were concerned by the fact that a number of FoHFs had invested in Madoff Securities.

The HFRI Fund-Weighted Composite Index was up 0.53% for the quarter, resulting in a performance-based gain of around $28bn (as opposed to flows from investor activity) – whereas in Q4-08, performance-based assets decreased by more than $162bn as the index was down 9%.

HFR said that total industry capital had declined to $1.33tn in Q1-09, $600bn below Q2-08’s peak, and $75bn below 2008’s year-end total. HFR reported on 21-Jan-09 that total assets at end-2008 stood at $1.4tn – 2006’s levels.

Investors continued to exhibit a lack of sensitivity to strategy performance; $16bn was withdrawn from macro strategies, which returned 5% in 2008; $27bn from relative value strategies, which retur......................

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