Tue, May 5, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

578 hedge funds launched in H1-2011, assets reach record level of $2.04tln as fees decline

Wednesday, September 14, 2011
Opalesque Industry Update - Hedge fund launches outpace liquidations as industry assets reach record level
Average incentive fees continue to decline;
Fund performance dispersion rises, reversing recent trend

New hedge fund launches in the second quarter of 2011 totaled 280, a slight decline from the 298 new funds that were launched in the first quarter, according to data released today by HFR in the latest edition of Market Microstructure Report: 2Q11.

The first half launch total of 578 was the strongest six months since the first half of 2007, as total hedge fund industry capital reached a record level of $2.04 trillion.

Fund liquidations in 2Q totaled 191, a slight increase from the 1Q total of 181; the liquidation total for the second quarter represents an attrition rate of 2.07 percent.

Investors exhibited a preference for direct investment in single-manager vehicles, as opposed to commingled fund of funds (FOF). Single-manager launches accounted for 245 of the launches in 2Q11, the highest level since 2Q07, while FOF’s experienced a net decline, with 53 liquidations and only 35 new launches.

Lower Fees, Higher Volatility
Both management and incentive fees charged by hedge funds declined in 2Q, with incentive fees posting a more significant decline. Average incentive fees industry-wide declined to 18.81 percent in 2Q (from 18.95 percent in Q1); however, the average incentive fees of funds launched in the trailing 12 months was 17.56 percent, the lowest level since 2005. Average hedge fund management fees posted a narrow decline of 1 bp to 1.57 percent, while FOF management fees were unchanged at 1.3 percent.

Performance dispersion between best and worst performing deciles of funds in the trailing 12 months rose to nearly 61 percent, reversing a trend of narrowing dispersion from prior quarters when volatility declined. The top performing decile gained an average of +48.2 percent over the trailing 12 month period, while the bottom decile declined by -12.7 percent. Recent performance dispersion represents an increase over prior quarters, however this remains well below the peak of over 116 percent observed in 2009.

“The first half of 2011 was a strong environment for new hedge fund launches, with the industry on pace to approach the full year total of nearly 1,200 launches in 2007,” said Kenneth J. Heinz, President of HFR. “While lower fees continue to be supportive of this growth trend, the evolution of fund transparency is also a significant factor driving new fund launches. As volatility has increased throughout 3Q, we expect fund launches to continue to appeal to these investor preferences, as hedge funds position for strategic growth and take advantage of tactical opportunities created by these volatile market conditions.”

(press release)


HFR (Hedge Fund Research, Inc.) is the global leader in the alternative investment industry. Established in 1992, HFR specializes in the areas of indexation and analysis of hedge funds. HFR Database, the most comprehensive resource available for hedge fund investors, includes fund-level detail on historical performance and assets, as well as firm characteristics on both the broadest and most influential hedge fund managers. www.hedgefundresearch.com


Bg

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. SEC charges funds of hedge funds Alpha Titans, executives, and auditor for improper expense allocations[more]

    Update: Please note the important updated information at the end of the article.The Securities and Exchange Commission today announced charges against a Santa Barbara, Calif.-based hedge fund advisory firm and two executives involved in improper allocations of fund assets to pay undisclose

  2. Swiss group Pictet releases first public annual and financial reports[more]

    Benedicte Gravrand, Opalesque Geneva: Pictet Group, a Swiss private bank, has just released its first public annual report and financial report since it opened for business in Geneva in 1805. I

  3. Opalesque Exclusive: Carne establishes non-EU ManCo in Jersey[more]

    Benedicte Gravrand, Opalesque Geneva: For those managers who will not domicile their fund in the European Union (EU) and yet want to distribute it in the EU – especially the UK –, going under the wing of an AIFMD-compliant ManCo on the Channel Islands could be one of the ways to do it. Ch

  4. Opalesque TV: Aequam Capital: Asset management industry will be mainly quantitative going forward[more]

    Benedicte Gravrand, Opalesque Geneva: Before starting his boutique in 2010, Arnaud Chretien, co-founder and CIO of Aequam Capital, worked ten years as a market trader and 18 years as a quantitative and systematic fund manager for Soc

  5. Class-action lawsuit accuse hedge fund Standard General of holding American Apparel hostage[more]

    Komfie Manalo, Opalesque Asia: A shareholder class-action suit filed on Wednesday accused New York-based hedge fund Standard General of holding American Apparel hostage. It would reportedly reap huge benefits if the clothing company declared bankruptcy. Standard General is the controlling sto

 

banner