Record Number of Hedge Funds Close In 2008

Mar 18 2009 | 12:42pm ET

Hedge fund industry lost more than assets in 2008, with a record number of hedge funds liquidating in the fourth quarter, according to data from Hedge Fund Research.

Almost 800 funds disappeared in the fourth quarter, more than double the previous quarterly record of 344 set the previous quarter. The total number of liquidations in 2008 was 1,471, a 70% increase from the previous full-year record of 848 set in 2005, according to HFR.

The fourth quarter also saw a sharp drop in the number of new funds launched, with only 56 new funds debuting, versus 117 funds launches in the third quarter. The launch total for the full year, 659 funds, was the lowest since 2000, when 328 funds were launched.

“After years of steady growth, 2008 was a record year for hedge fund liquidations, reflecting in part the transitions occurring across many aspects of the overall financial industry, as well as the substantial performance dispersion between hedge funds,” said Kenneth Heinz, president of HFR. “As the industry evolves to suit investor demand, trends in strategy preferences, service providers, disclosure and transparency are likely to shape the industry landscape for the foreseeable future.”

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