Hedge funds, licking their wounds after a miserable past 12 months, are requesting clients to give more notice if they want to hit the exits.

GAM, the investment business owned by Julius Baer, the Swiss private bank, has tightened investor redemptions to 90 days instead of once a month. GAM runs long-only and hedge funds and its assets under management have fallen by about a third over the past 12 months. On average, hedge funds have seen their values fall by more than 20 per cent over the past year, according to Chicago-based Hedge Fund Research.

And Thames River Capital, a UK-based provider of hedge funds and other investment vehicles, has also lengthened redemption periods to 90 days from a month on its Warrior suite of funds, a spokesman for the company told WealthBriefing.

Other firms which have, meanwhile, halted redemptions on some of their funds completely include GLG - which has halted or restricted pullouts.

Even if hedge fund firms do not explicitly require notice periods before clients can withdraw money, they can frequently invoke fine print of contracts to restrict pullouts by the use of measures such as gate provisions, which allow clients to withdraw only a certain portion of capital, for example.

The trend of longer redemption notice periods is expected to continue but should only be used as a last resort, said Jérôme de Lavenére Lussan, managing partner of consultancy Laven Partners, an investment management consultancy.

"We expect some hedge fund firms to increase the notice period for redemptions, however we do not believe this is sensible unless absolutely necessary because investors will not take kindly to the change,” he said.

“We recommend our investor clients stick to liquid [hedge fund] strategies which do not need to lock investors in. Further, we recommend our clients only accept longer notice periods if they are satisfied that the strategy justifies these and they want to participate in such strategies because  of the perceived benefits, but even then only as a smaller proportion of the portfolio,” he added.

Man Group, the UK’s largest listed hedge fund business with products such as its flagship AHL managed futures fund, has not demanded longer redemptions, WealthBriefing understands. The firm declined to comment on any moves it might make in this area.

GLG and RAB Capital, two other large hedge fund businesses, declined to comment. In the case of RAB Capital, the firm has cut its product range amid large falls in assets under management. It has also restructured its high-profile RAB Special Situations Fund.

Last year, RAB said its Special Situations vehicle won support of investors for a three-year lock-in at reduced fees while RAB Energy and RAB Octane funds have exercised powers to meet redemptions in specie and part of their investor bases have opted for long lock-ins.

Not all funds are lengthening redemption periods without offering something in return to assuage investors. Sushil Wadhwani, a former member of the Bank of England's Monetary Policy Committee who now runs a hedge fund business, has reduced fees from 5 per cent to 1 per cent for redemptions made within a year of investment. The move is seen as a way to encourage investors to put money into his investment vehicles. Among Mr Wadhwani's investment vehicles is the Keynes Fund, reported to have generated strong returns last year.