Hedge Fund Attrition Rate Falls Again

Feb 1 2007 | 12:03pm ET

Misery loves company, and Amaranth Advisors had plenty of that in 2006, as some 450 hedge funds closed their doors.

Of course, none were as spectacular as the blow up of Greenwich, Conn.-based Amaranth, which lost some $5 billion on natural gas trades gone bad. But, according to the Hennessee Group, which compiled the data, many shuttered more quietly for the same reason: poor performance. Others fled the growing hedge fund industry due to fewer trading opportunities or for greener pastures in new careers.

The news, however, was far from all bad. While 450 hedge funds said goodbye, last year saw the birth of between 1,000 and 1,500 funds. What’s more, the overall attrition rate declined, with just 5.1% of funds tracked by Hennessee closing, compared to 5.4% in 2005, 6.2% in 2004 and 6.4% in 2000. Over the past eight years, an average of 5.2% of hedge funds have thrown in the towel annually.

Hennessee went on to predict that failures and liquidations should continue to decline in the future.


In Depth

Fundraising for Mid-Sized PE Funds: Should You Use a Registered B/D?

Dec 6 2016 | 7:18pm ET

When does a fund sponsor need to use a registered broker/dealer when raising capital...

Lifestyle

Trump Attends 'Villains and Heroes' Costume Party Dressed As...Himself

Dec 5 2016 | 11:16pm ET

U.S. President-elect Donald Trump attended a "Villains and Heroes" costume party...

Guest Contributor

A Hard Look At Your ‘Soft’ Hedge Fund Marketing Information

Dec 8 2016 | 9:03pm ET

Conventional wisdom holds that due diligence examines quantitative as well as qualitative...

 

From the current issue of

Since the inception of Modern Trader, a core editorial theme has centered on the wisdom and power of crowds. Editorial emphasis has focused on companies and projects engaged in the collection and analysis of information. 

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR