GLG Partners, the London hedge fund, has imposed a set of exit charges of as much as 5 per cent on any investor who wants to pull their assets out of Greg Coffey's benchmark $4.5 billion emerging markets fund before its star manager formally quits at the end of October.

Once he leaves, redemption would be free.

Sources close to GLG, which is bracing itself for as much as $4.3 billion to head for the exit in the wake of Mr Coffey's resignation, said the fund was insisting that fleeing investors pay the redemption penalties, the terms of which are detailed in the original prospectus.

They said that GLG had made concessions to requests from investors in other areas.

Penalties depend on the amount invested and for how long. GLG is understood to have written to investors over the past few days to tell them of the charges

"The charge could be 5 per cent; it could be nothing. It depends on how much you have invested and what the holding period is," said one source close to the hedge fund.

"All investors have the right to redeem their capital at any time; they have a free option to redeem it after Greg has left the fund at the end of October. GLG has made a number of concessions, but not on the redemption fee."

Mr Coffey, who shocked the hedge fund world when he resigned from GLG last month, was originally responsible for managing about $7 billion of GLG total funds of $24.6 billion.

His resignation sent GLG shares tumbling and triggered worries that a rash of investors would withdraw their funds. By imposing the penalties GLG appears to be trying to encourage investors to stay, possibly giving it time to hire a manager or team to replace him.

Mr Coffey's funds had fallen to $6.3 billion as at the end of April and performance is down more than 19 per cent for the year to date.

Noam Gottesman, GLG's chairman and chief executive, said earlier this week that the funds could be left with as little as $2 billion in assets once Mr Goffey has gone.

His decision, a big blow to the firm, is expected to trigger a round of staff departures as well.

News of the penalties come a day after it emerged that Soraya Chabarek, a GLG partner who worked in Middle East marketing, had handed in her notice.

Ms Chabarek is understood to be responsible for between 5 per cent and 6 per cent of GLG's total assets; according to reports she has brought in a fifth of the fund's inflows.

Sources close to the fund said yesterday that Ms Chabarek was one of 15 marketeers. They played down the significance of her departure, suggesting it was nothing like as important as that of Mr Coffey and did not have to be disclosed to shareholders.

GLG declined to comment.

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