Mon, Jan 26, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

New hedge fund launches accelerate in 2010 as liquidations and incentive fees decline

Thursday, March 03, 2011
Opalesque Industry Update - New hedge fund launches continued at a steady pace through the end of 2010, as new fund offerings outpaced fund liquidations for the first time since 2007, according to data released today by HFR Hedge Fund Research, Inc., the leading global provider of information and analysis of the hedge fund industry. New hedge fund launches totaled 935 in 2010, topping each of the prior two years and completing the best year for launches since 2007, when nearly 1,200 new hedge funds launched. The fourth quarter saw 220 new funds launched, completing a strong calendar year despite being the second lowest quarterly launch total in the last six quarters.

Hedge fund liquidations totaled 743 in 2010, the fewest since 2007 and nearly half of the record calendar year liquidation total of 1,471 set in 2008. The fourth quarter saw only 158 funds liquidate, the lowest total since 4Q07 and only approximately 20 percent of the record total of 778 funds which liquidated two years earlier in the volatile 4Q08.

Performance dispersion narrows on lower volatility
Performance dispersion between the best the worst performing hedge funds narrowed considerably in 2010 from the staggering levels of 2008 and 2009, with only 58 percentage points of performance separating the average of the top and bottom deciles of hedge fund industry returns for the year. The HFRI Fund Weighted Composite Index, a proxy for broad industry returns, returned +10.3 percent for 2010, the top decile of funds returned an average of +43.2 percent while the bottom decile declined by -14.6 percent. Performance dispersion reached a record level of 116 percentage points in 2009 when the top decile gained an average of 100 percent; in 2008, dispersion was approximately 103 percent as the bottom decile lost a record -62.4 percent.

Top industry service providers remain entrenched; hedge fund fees decline
J.P. Morgan and Goldman Sachs remained the top prime brokers to the hedge fund industry; with 19.7 percent of funds listing Goldman Sachs as prime broker while J.P. Morgan is listed as prime broker for 29.3 percent of all hedge fund assets. Citco Fund Services; Schulte, Roth & Zabel; and Pricewaterhouse Coopers were each top service providers (based on hedge fund industry AUM) for administration, legal and auditing, respectively.

Average hedge fund incentive fees continued to decline, falling to 18.95 percent industry wide, the lowest level since HFR began tracking aggregate industry fee structure; average management fees were unchanged at 1.58 percent. “New hedge fund launches and liquidations in 2010 reflect dynamic shifts in the landscape of the hedge fund industry which will define the next decade of industry growth and evolution,” said Kenneth J. Heinz, President of HFR. “The modern hedge fund industry encompasses strategic exposures not only to equity and fixed income markets, but to specialized currency, commodity, inflation protection, energy, and securities issuance trends through accessible, transparent vehicles supported by leading global financial institutions.”

(press release)

Source

kb

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Commodities - Druckenmiller alums at PointState make $1 billion on oil, Andurand Capital sees oil sliding to $40[more]

    Druckenmiller alums at PointState make $1 billion on oil From Bloomberg.com: Hedge fund manager Zach Schreiber stood on stage at Avery Fisher Hall in New York eight months ago and made a bold prediction. “We believe crude oil is going lower -- much lower,” Schreiber, 42, told the audienc

  2. Investing - David Einhorn discloses a new position in Time Warner, Canyon trimming bets on mortgage bonds after making $7bn[more]

    David Einhorn discloses a new position in Time Warner From FTLeavenworthlamp.com: …Einhorn also disclosed a new position in Time Warner. "Since 2009, TWX has refocused its business into a collection of high quality assets including basic cable networks (Turner and CNN), a movie studio (

  3. Top performing private equity firms you should invest in[more]

    Komfie Manalo, Opalesque Asia: Professor Oliver Gottschalg of Paris-based HEC Business School, also known as Ecole des Hautes Etudes Commerciales de Paris has released his annual ranking of the top performing private equity firms. The 2014 HEC-DowJones Private Equity Performance Ranking

  4. Comment - Why invest in hedge funds if they don't outperform the market?[more]

    From Forbes.com: Hedge funds have always been a bit exotic and an enigma to some, but bottom line they are supposed to produce good returns using a range of strategies including global macro, event driven and relative value (arbitrage). And, sophisticated or high-net-worth individuals (HNWIs) could

  5. Owen Li 'truly sorry' for blowing up $100m of hedge fund’s assets[more]

    From CNBC.com: A hedge fund manager told clients he is "truly sorry" for losing virtually all their money. Owen Li, the founder of Canarsie Capital in New York, said Tuesday he had lost all but $200,000 of the firm's capital—down from the roughly $100 million it ran as of late March. "I take r