Q3 Sees Launch of 260 New Hedge Funds

Dec 16 2010 | 8:48am ET

The third quarter of 2010 saw the launch of 260 new hedge funds—up from 201 launches in Q2, according to Hedge Fund Research.

Hedge fund liquidations fell to 168 in Q3 from 177 in the previous quarter. This brings the total number of liquidated funds in 2010 to 585, down 31.8% over the same period in 2009.

HFR notes that this is the fifth consecutive quarter in which launches outnumbered liquidations.

Equity hedge and macro strategies accounted for the largest number of new launches, while event-driven and fund of hedge funds accounted for the fewest.

Almost 25% of Q3 launches comply with UCITS III guidelines, which incorporate liquidity requirements, restrictions on instruments and leverage, and emphasize the role of the local market regulator. 

According to HFR’s data, the average incentive fee fell by 11 basis points to 19.0%, the second-largest quarterly decline in incentive fees since 2008, while average management fees remained at 1.58%. Both management and incentives fees charged by fund of hedge funds declined for the quarter.

“The trends in new hedge fund launches clearly reflect powerful dynamics currently reshaping the landscape of the industry and redefining the relationship between investors and managers,” said Kenneth J. Heinz, HFR president. “These trends are likely to continue as the hedge fund industry appeals to an increasingly wider, more global and more institutional investor base.” 


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