Hedge funds are hunkering down to face what might be their hardest blow in a year filled with heavy blows as the deadline for investors to notify them of redemptions looms. The deadline, which comes Saturday, is expected to bring a tidal wave of withdrawals as thousands of investors tell hundreds of hedge funds they want their money back by year's end.
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Hedge fund legend George Soros expects the industry to be crushed, telling
Congress Thursday that "the bubble has now burst, and hedge funds will
be decimated. I would guess that the amount of money they manage will
shrink by between 50% and 75%."
Funds that require three months notice from investors who wanted to
exit by year's end had a similar deadline on Sept. 30 -- also known
in the industry as "D-Day,"
according to Reuters.
The industry was already slammed by roughly $100 billion in withdrawals
in October alone, as it suffers through some of its worst performances
in its history.
Hedge funds have approximately $2 trillion in capital and at times
controlled as much as $10 trillion or more in assets, according to
Soros. Should the rate of redemptions continue to accelerate from
October's already huge figure, equity and debt markets around the world
will see valuations continue to plummet as hedge funds dump holdings to
meet the withdrawal requests.
- George White
See Reuters storySee Dealscape post on hedge funds before Congress
Comments
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