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

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.