WEST PALM BEACH, FL (HEDGECO.NET) – New released survey shows that many hedge fund investors are fleeing from hedge funds charged in the mutual fund trading scandals. Late last year, New Jersey basedhedge fund manager, Canary Capital Partners LLC agreed to pay $40 million settlement to New York without admitting any wrongdoing, following market timing and late trading charges by the New YorkState Attorney General Eliot Spitzer.
According to Hedge Fund Research Company Inc. of Chicago, [HFR] those funds charged in the illegal trading and market timing activities saw a net outflow of US$1.8 billion, from their portfolios in 2003. Such assets walked out of the door during the fourth quarter when such allegations surfaced. Those withdrawn assets represent over half of the management assets of the companies involved in the scandals.
Hedge Fund Research of Chicago also said that Investors also pulled out $3.04 billion from hedge funds charged in market-timing illegal trading from October through December. Such loss more than offset the $1.25 billion of new assets which those funds gained in during the first three quarters of 2003.
Federal and State investigators also expanded the investigation including some large hedge funds, and investment professionals. Commenting on the magnitude of investor asset pull-out, Joshua Rosenberg, the President of HFR said the degree of the pull-out suggests that hedge fund investors are concerned as federal and state authorities subject market timing strategies under a microscopic view, other hedge funds employing such strategy may find it difficult to operate under such conditions. Rosenberg said, �There’s not a huge tolerance of that kind of risk in the hedge-fund world.�
Hedge funds tracked by HFR gained an average of 15% in 2003, the average hedge fund returned about 17% in 2003. The broader hedge funds gained about $75 billion in 2003, bringing total hedge fund assets to over $750 billion.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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