Hedge Fund Launches Fall In Q3, Liquidations Rise

Dec 16 2013 | 10:40am ET

Despite a renewed investor appetite for hedge funds, the fewest in almost three years came to market in the third quarter.

Just 231 hedge funds debuted between July and September, according to Hedge Fund Research, down from 288 in the second quarter. A total of 813 hedge funds have launched this year, meaning that nearly 300 will have to open this quarter if 2013 is to match last year's total of 1,108 launches.

In addition to fewer launches, more hedge funds closed their doors in the third quarter than in either the first or second. Some 222 liquidated, up from 190 in the second quarter. The third quarter's casualty figure was the highest since the fourth quarter of last year.

HFR President Kenneth Heinz suggested that the looming Volcker rule—which was finalized last week—had scared some managers from a third-quarter launch.

"The increased uncertainty has likely adversely impacted hedge fund launches in the short term," he said. Having the rule in place, however, "is likely to result in increased hedge fund launches as experienced investment professionals set up new funds."

Some such would-be managers may also be discouraged by the huge amount of money they'll need to raise to survive: A recent Citigroup report suggests that hedge funds need at least $300 million in assets to cover costs.


In Depth

GSAM's Papagiannis: Liquid Alternatives For The Long Run

Apr 21 2017 | 8:44pm ET

Interest in liquid alternatives cooled a bit last year amid a broad shift in investor...

Lifestyle

Aston Martin Returns To Debt Market As DB11 Drives Turnaround

Mar 31 2017 | 5:21pm ET

James Bond’s preferred carmaker is returning to the public debt markets for the...

Guest Contributor

Debunking Conventional Investment Wisdom (Part II)

Apr 17 2017 | 5:56pm ET

The alternative investment industry is currently replete with buzzwords around data...

 

From the current issue of