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July 18, 2005
Recent movements in dollar may lead to hedge fund redemptions
The Dollar has been seen to be somewhat strong recently. This movement, has unnerved some investors. Fauchier Partners, which is a London based fund of hedge funds, commented that this could spur redemptions in the coming few weeks. It is felt that in the movement in dollar and low bond yields may lead to reallocation of funds by investors. This is expected to affect providers of guaranteed products more as they operate on very strict guidelines on balancing of their assets. An overall 10% loss has been witnessed by European funds of hedge funds in the wake of dollar getting stronger against Euro and Sterling. This may initiate redemptions due to shortfalls irrespective of the performance of the funds. Hedgefundsworld.com reports:
“In particular, funds of hedge funds and providers of guaranteed products, who have strict rules concerning the balance of their assets, may move money out of hedge funds as the recent strength of the dollar may have upset this balance.”
Read more: Stronger dollar may prompt redemptions.
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