European Hedge Fund Launches Fall 45%

Jul 28 2008 | 11:33am ET

Hedge fund launches in Europe fell 45% to a six-year low in the first half, according to a new report.

In the first six months of the year, just 106 funds debuted, 84 fewer than the year-earlier period’s 190, according to EuroHedge. The 106 funds are the lowest total of first-half launches since 2002, when just 84 funds hit the market.

The new funds raised 30% less than last year’s launches, as well, bringing in US$10.8 billion, compared to US$15.5 billion in the first half of 2007.

“The global credit crunch and extreme turbulence across the financial markets have resulted in a sharp decline in the number of new hedge fund launches and the capital raising climate has become increasingly tough,” Neil Wilson, editorial director of Hedge Fund Intelligence, which publishes EuroHedge, said.

On the bright side, those hedge funds that did get off the ground during the first half are larger than last year’s new funds. The average hedge fund launch in Europe from January to June boasted US$101.9 million in initial assets, compared to US$81.8 million last year. And European hedge funds are not closing at a faster rate than previous years, with 53 closing their doors. Full-year closure rates have ranged from 110 to 126 over the past three years.

Multi-strategy and mixed-arbitrage launches were most popular with investors, taking in $4.5 billion of the new money. European long/short fund launches totaled $2.1 billion.


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