Wed, Oct 26, 2016
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Hedge fund industry accelerates into 2012 with the most fund launches since 2007

Tuesday, March 13, 2012
Opalesque Industry Update: Hedge fund launches in 2011 increased to the highest level since 2007, as investors and managers positioned for 2012 amid intense volatility and macroeconomic uncertainty, reported HFR (Hedge Fund Research Inc.) today, the global leader in the indexation, analysis and aggregation of the alternative investment industry. Hedge fund launches totaled 1,113 in 2011, including 270 in 4Q11, the highest calendar year total since 1,197 funds launched in 2007. Fund liquidations declined from the previous quarter but rose for the full year, with 190 liquidations in 4Q11 and 775 for the year; the 2011 total represents a narrow increase over the 743 liquidations in 2010. The total number of funds rose to 9,523 in 2011, while total hedge fund industry capital rose by 3 percent to $2.02 Trillion.

New fund launches in 2011 were concentrated in Equity Hedge and Macro strategies, with 479 and 265 fund launches, respectively; the former is the highest EH launch total since 2006, while the latter is the highest total for Macro since HFR began tracking this in 1996. Equity Hedge also experienced a high rate of liquidations, with 293 EH funds closing, the highest since 651 funds closed in 2008. Attrition in Fund of Hedge Funds declined to a pre-Financial Crisis level; FOF experienced 215 closings in 2011, the fewest liquidations since 2007. By management firm location, slightly more funds were launched in the US than Europe, while liquidations were higher in Europe, with both representing reversals from the prior year.

While the HFRI Fund Weighted Composite Index declined by -5.26 percent in 2011, constituent fund dispersion also narrowed in 2011to the lowest level since 2006, with the compression concentrated in fewer positive outliers. The worst performing decile of the broad based composite declined by -30.7 percent for 2011, while the top decile gained +19.5 percent, implying a top-bottom dispersion of just over 50 percent. This represents a decline from nearly 58 percent in 2010 and over 100 percent in both 2008 and 2009. Last year marked the lowest average performance for the top decile since HFR began tracking this metric in 2000 by a significant margin; the next lowest performance by the top HFRI decile was a gain of +39.2 in 2002, nearly twice the 2011 figure.

Average management fees were unchanged from the prior quarter at 1.57 percent; these declined 1 basis point for the year. Average incentive fees continued to decline, with these falling to 18.71 percent; incentive fees declined 1 basis point over 3Q11 and 24 bps since year end 2010.

“Despite performance volatility and macroeconomic uncertainty in the second half of the year, investors maintained a strong commitment to hedge funds, and fund managers expanded the scope and breadth of strategies offered, making 2011 the strongest year for new launches since the global financial crisis,” said Kenneth J. Heinz, President of HFR. “While some have suggested that increased regulation may deter new fund launches, many hedge funds are launching not only as a result of increasing investor risk tolerance, but also as a result of these regulatory changes to trading activities and risk oversight at financial institutions. The hedge fund industry has and will continue to expand and innovate to offer more sophisticated and transparent strategies to meet the requirements of institutional investors.”


Press Release


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. M&A - U.S. hedge fund HarbourVest is shock winner in the £1.1bn SVG Capital takeover saga, Hedge fund Parvus shows hand, toppling William Hill merger deal[more]

    U.S. hedge fund HarbourVest is shock winner in the £1.1bn SVG Capital takeover saga From The fierce battle to buy Britain's biggest private equity group has come to an unexpected conclusion, with the original bidder walking away with the prize. SVG Capital has agreed

  2. Marc Lasry: Energy is still a phenomenal opportunity[more]

    From Distressed debt specialist Marc Lasry said energy debt is still a "phenomenal opportunity" because investors can get "massively overpaid" for the risk they take on. There are "huge opportunities" in the energy sector especially in restructurings, the Avenue Capital Group CEO said Tues

  3. Opalesque Exclusive: Ex-SAC manager re-emerges with market neutral hedge fund[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: A manager re-emerged from the SAC battleground last year to launch his own hedge fund under the umbrella of New York-based investment firm Endicott Group.

  4. North America - Hedge-fund manager Kyle Bass says the U.S. is on track for stagflation, Billionaire hedge fund titans Dinan, Lasry on election, markets and best investment ideas[more]

    Hedge-fund manager Kyle Bass says the U.S. is on track for stagflation From Kyle Bass, founder of Hayman Capital Management, on Wednesday warned that the U.S. is headed toward so-called stagflation. Stagflation is typically described as persistently high inflation and hi

  5. David Einhorn speaks on passive investing, Mylan, his cheapest stock, the Fed[more]

    From Greenlight Capital hedge fund manager David Einhorn (Trades, Portfolio) joined nine other famed investors on Tuesday to talk about stocks at the annual Great Investors’ Best Ideas Investment Symposium in Dallas. Presenters at the annual conference typically pitch one or severa