Sunday, 25 January 2015
Last updated 1 day ago
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.
Jan 23 2015 | 1:00pm ET
In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…