Liquidations Rise But Are Outpaced By Launches In '12

Mar 14 2013 | 1:21pm ET

Hedge fund liquidations spiked but hedge fund launches held steady, as the industry grew slightly in 2012 in number of funds.

More hedge funds—873—closed their doors last year than in any year since 2009, according to Hedge Fund Research. And the 283 liquidations in the fourth quarter were the most in a three-month period since the beginning of 2010. But 1,108 new funds debuted last year, just five fewer than in 2011.

More than 300 of the closed hedge funds were equity hedge funds, while the strategies seeing the most new funds born were macro, relative value and equity hedge. All told, industry assets reached a record $2.25 trillion.

"Despite total industry assets increasing to a record level, the capital raising environment continued to be challenging for emerging managers, including both small and mid-sized funds, as well as newly launched funds," HFR President Kenneth Heinz said. "While emerging manager performance has been strong, the bulk of the capital raised in the past two years has been allocated to the industry’s most well-established firms."

HFR also said that fees across the industry continue to fall, with the average management fee now 1.56% and the average performance fee 18.54%. Funds launched last year actually charge a higher average management fee, 1.62%, and a much lower average performance fee, 17.74%.


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Chicago-based independent futures brokerage and clearing firm R.J. O’Brien & Associates (RJO) has hired industry veteran Daniel Staniford as Executive Director, responsible for the firm’s institutional business development in New York and London.

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