Survey: Most 2011 HF Startups Were Equities Strategies

Feb 22 2012 | 1:06pm ET

Seward & Kissel, which bills itself the law firm that “helped create the first hedge fund” (A.W. Jones & Co. in 1949), has just completed a survey of new U.S. hedge funds.

The Seward & Kissel 2011 New Hedge Fund Study focused on the firm’s own clients and, of those, considered only hedge funds sponsored by new U.S.-based managers entering the market in 2011 (or scheduled to enter in Q1 2012), not new funds sponsored by existing managers. Seward & Kissel did not say how many funds were involved in its survey but estimates its sample represents about 60% of all 2011 hedge fund startups.

Among the survey’s key findings was that half the new U.S. hedge funds created in 2011 are equity or equity-related strategies, one third of which focus on U.S. equities. Multi-strategy funds accounted for 20% of new launches in 2011 and credit strategies for 10%. Another 20% of funds fell into the “miscellaneous” category.

Despite much talk about fees in the wake of the 2008 financial crisis, the study found that the majority of new U.S. hedge funds still charge the traditional 2% management fee and 20% performance fee. All the funds surveyed had high water mark provisions.

Three-quarters of the new funds offered quarterly redemptions while the remainder offered monthly exits.

A full 60% of the funds had a soft lock-up (usually a year) while 30% had no lock-up and the rest had a hard lock-up.

The vast majority of funds in the study had no gates while about 25% had an investor level gate.

You’ll need $1 million to invest in most newly launched U.S. hedge funds, although that could drop as low as $250,000 or soar to $5 million for some funds.

Seward & Kissel found that 45% of responding funds had benefitted from some form of founders’, seed or strategic capital, but the majority did not.


In Depth

Q&A: High Conviction, Low Correlation

Oct 30 2014 | 7:35am ET

Acadian Asset Management's numbers are big: over $70 billion in assets under management...

Lifestyle

Ex-Hedgie Steyer Gives $56M To Climate Action Super PAC

Oct 28 2014 | 9:23am ET

Retired Farallon Capital founder Tom Steyer has poured almost $56 million into his...

Guest Contributor

Hedge Funds Weather A Data Management Perfect Storm

Oct 22 2014 | 12:28pm ET

From a regulatory standpoint, nearly every development since the crisis has placed...

 

Videos

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

October 2014 Cover

Demeter: Family affair

David and James Hamman launched their fundamental Livestock and Grains Program in March of 2010 but it really was decades in the making.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.