$103b withdrawn from US hedge funds in Q1

CHICAGO -- Investors continued to withdraw capital from hedge funds in the first quarter of 2009, redeeming nearly US$103 billion, according to data released on Tuesday.

The redemption figure, about 7.3 percent of overall hedge fund assets, was down from the record quarterly withdrawals in the fourth quarter of 2008 of over US$152 billion, said Chicago-based Hedge Fund Research (HFR).

Total hedge fund industry capital declined to US$1.33 trillion as of the end of the first quarter of 2009, US$600 billion below the its peak at the end of the second quarter of 2008 and US$75 billion less than the total asset at the year-end 2008.

"Extreme investor risk aversion subsided into the end of the first quarter, but remained at elevated historical levels as industry consolidation continued through quarter end," said Kenneth J. Heinz, HFR President.

"In addition to performance, investors are focused on structure and transparency, and the industry is in the process of evolving to meet these demands," he said.