Gwyn Roberts

05/10/2011 Author: Gwyn Roberts

Editor's view: 5 October 2011

August was bad, September could be worse, but still investors seem to be holding their nerve. Last week, Man GLG’s larger-than-expected redemptions drew a line in the sand between stickier institutional allocators (the bread and butter of most funds) and the flightier retail investors who have deserted GLG’s long-only products.

Managers who remain firmly institutional will take some comfort in this. Others – particularly those who have made a play for the mass affluent by launching more retail, and liquid, ‘Newcits’ products – might be a little more worried about what the next few months may hold.

Fortunately, whether gunning for old or new-style allocators, the majority of funds now know that communicating with investors in bad times suddenly takes on a special new relevance.  It seems that long-term investors can live with a run of down-months. What they can’t abide is clumsy excuses or a draw-bridge mentality that refuses to explain losses or the sudden shift to a new strategy.

This stance proved the downfall of some funds in 2008/09 but, according to investors and prime brokers spoken to by HFMWeek, so far has been largely avoided.

It may sound dangerously ‘new age’, but let’s keep talking about our difficulties. As Europe’s headless politicians have failed to learn, only open and transparent lines of communication can make things better, and prevent the sort of reflex redemptions that could threaten the industry.

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