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Alternative Market Briefing

Number of hedge fund launches surpasses liquidations in 3Q09 but real asset growth remains a challenge

Thursday, December 10, 2009

From Kirsten Bischoff, Opalesque New York:

While hedge fund launches are finally outnumbering fund closures (as of 3Q09 according to HFRI), industry-wide, asset-raising remains a challenge.

Research released on Wednesday revealed that the worst of the pain for managers might be over, but the road to re-growth remains in the earliest stages. HFRI reported that while YTD liquidations remain greater than launches (858 closures v 554 launches), 3Q09 marked a turning point as launches finally surpassed liquidations (224 launches vs. 109 liquidations). (HFRI)

"There is no question we have seen the number of liquidations slow down in the last quarter or two," Steve Keller, Managing Director at Banc of America Merrill Lynch's prime brokerage arm says. Keller also notes that of the liquidations still occurring, many are happening at funds that gated assets and/or suspended redemptions in late 2008 and early 2009 that are now going through final closures.

The gating of funds that occurred within the hedge fund industry remains a topic of ongoing debate for investors and managers alike. Many investors have voiced very unfavorable opinions of the hedge fund managers that gated liquid investments in an attempt to stem the tide of outgoing funds during a period of severe liquidity and poor performance. Others enacted gates only as a la......................

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