HFR: Fund Launches, Liquidations Slowed In Q4

Mar 19 2008 | 12:38pm ET

The pace of both hedge fund launches and liquidations slowed in the fourth quarter of 2007, according to Hedge Fund Research.

The Chicago-based research firm reports that 288 new hedge funds were launched while 154 funds were wound down.

For the year, 1,152 new funds were started while 563 funds liquidated and returned remaining capital to investors. This compares to 1,518 funds launched and 717
funds liquidated in 2006.

Equity hedge funds and fund of hedge funds saw the highest number of new launches, while event driven strategies attracted the fewest number of new entrants. The average launch size of a fund was approximately $30 million, while the average 2007 performance of a liquidated fund was a loss of 5%.

In spite of the turbulent markets, the overall rate of hedge fund attrition slowed to -5.95% in 2007 from -8.28% in 2006 and -11.40% in 2005. However, at 589, the number of net new funds added was the lowest since 2001, when a net 581 new funds entered the market.

“In 2007, investors demonstrated a preference for established managers, as
evidenced by the concentration of assets in the largest funds, with requirements for institutional infrastructure likely constituting a higher hurdle for new fund launches,” said Kenneth Heinz, president of HFR.

“Financial market volatility provided an opportunity for fund managers to clearly differentiate themselves from their competitors, and those that did so successfully attracted investor capital. Fewer launches in previous quarters likely contributed to the smaller number of liquidations as well.”


In Depth

Q&A: Executive Recruiter Talks Hedge Fund Closures, Hiring Trends

Dec 19 2014 | 6:58am ET

This year, hedge funds have been closing at a rate not seen since the financial...

Lifestyle

Cooper-Hohn Won't Contest Divorce Settlement

Dec 18 2014 | 9:51am ET

The ex-wife of hedge fund billionaire Christopher Hohn will not contest a divorce...

Guest Contributor

Alternative Investment Funds Face A Communications Imperative

Dec 19 2014 | 6:10am ET

A handful of the top alternative investment firms on both sides of the Atlantic...

 

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.