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

Why Ponzi Schemes Work: An In-Depth Look At The Allen Stanford Fraud

Dec 21 2014 | 10:30am ET

Texan Allen Stanford first appeared on the radars of financial regulators in 1997...

Lifestyle

Hedgie Funds US Squash Program

Dec 24 2014 | 8:46am ET

Squash, anyone?

Guest Contributor

EidoSearch’s Top Three Market Projections For 2015

Dec 23 2014 | 4:03am ET

It is that time of year again when prognosticators make their big market calls for...

 

Sponsored Content

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

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

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.