Tuesday, November 11, 2008

Traxis downplays risks of redemptions

Barton Biggs, director at Traxis Partners says at Fortune.com that fears about the market and possible effects of redemptions from hedge funds are overblown. He estimates that about $250 billion worldwide will be withdrawn from hedge funds by mid-2009. He notes that this is a relatively small amount and that funds have been preparing for it (the industry's net long position is said to be about 20% of equity, an all-time low).

He points out that despite well-publicized losses by the hedge fund industry this year, traditional long-only managers have done worse. This should mitigate redemptions. "So where are the redeemers going to put their money?" asks Biggs.

The industry needs more voices like Biggs advocating the, ahem, long view.

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