Tue, Jul 29, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Hedge fund launches tracking 2011 levels, 275 in Q3

Tuesday, December 11, 2012
Opalesque Industry Update: New hedge fund launches and liquidations maintained the pace of recent quarters in 3Q12 despite the overhang of macroeconomic risks, political uncertainties and anticipated regulatory changes, according to data released today by HFR, the leading provider of indexation, research and analysis for the global hedge fund industry. Hedge fund launches totaled 275 in 3Q12, an increase from 245 in the prior quarter, bringing total launches in the trailing 12 months to 1,094 funds, slightly below the 2011 launch total of 1,113 fund openings. Hedge fund liquidations increased to 211 in 3Q12, an uptick from the 192 liquidations in 2Q12, bringing total liquidations to 825 in the trailing 12 months, slightly ahead of the 2011 total of 775 fund closings.

Concurrent with total hedge fund industry assets reaching a record level of $2.2 Trillion, the total number of single-manager hedge funds also reached a record level of 7,867 funds in 3Q12. However, in contrast to this trend, and indicative of an increased propensity for investors to invest directly into hedge funds, the total number of Funds of Hedge Funds (FOF) in existence declined to fewer than 1,900, a level not seen since 1Q05. Launches in both Macro and Relative Value Arbitrage (RV) strategies exceeded launches in Equity Hedge for the first time in 3Q12, with over 100 new Macro funds and over 70 new RV funds launching in 3Q12, compared to 60 launches in Equity Hedge. Steady fund performance by RV strategies over the past four years has continued to attract new investor capital, with total assets in RV increasing to $586 Billion, equaling the amount of capital invested in Equity Hedge strategies.

After narrowing throughout 2011, performance dispersion between the top and bottom deciles of hedge funds increased in the trailing 12-month period ending 3Q12, with the top decile of funds averaging a gain of +34.0 percent and the bottom decile averaging a decline of -18.9 percent, creating a top/bottom decile dispersion of nearly 53 percent.

The industry-wide average management and incentive fees both declined as of 3Q12, with the average management fee falling 1 bps to 1.56 percent and the average incentive fee falling 14bps to 18.62 from the prior quarter. Meanwhile, the average fee structure of funds with assets greater than $1 Billion was slightly higher, averaging a 1.60 percent management fee and an 18.65 percent incentive fee.

“Recent hedge fund launches reflect the dynamic evolution of the entire hedge fund industry since 2008, with investor preferences shifting away from equity market beta and funds of hedge funds, and towards Macro and Arbitrage strategies which are able to accommodate the demand for transparency, liquidity and cost sensitivity of institutional investors,” stated Kenneth J. Heinz, President of HFR. “Hedge fund launches continue to be strong into year-end despite continued prospects for regulation and political uncertainty as a result of increased demand from institutional investors facing the challenge of achieving required rates of return through the current environment of low fixed income yields and high equity market volatility. Despite its record levels of growth, the hedge fund industry still represents only a fraction of total global capital base, which is likely to grow exponentially in coming years as both institutional and individual investors incorporate alternatives into their existing allocations.”

HFR

Press Release

BM

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. Events – AIMA Australian Hedge Fund Forum, Sept. 16, Sydney[more]

    AIMA Australia invite you to join us at our annual Hedge Fund Forum on Tuesday 16th September 2014 at the Sofitel Sydney Wentworth. The AIMA Australian Hedge Fund Forum is a non-profit hedge fund conference organised by the industry for the industry, featuring quality Australian and internation

  2. Opalesque Roundtable: Success in hedge fund marketing not linked to performance, but investor appetite[more]

    Komfie Manalo, Opalesque Asia: Success in marketing a fund is not linked to the performance, but to investor appetite, to the way you can market the fund, and to how much time you can spend to raise assets, said Antoine Rolland, the CEO of incubator and seeding firm

  3. Opalesque Exclusive: Loeb, Grantham cite growing economic concerns in letters[more]

    Bailey McCann, Opalesque New York: Hedge fund manager Daniel Loeb, head of Third Point, and Jeremy Grantham of Grantham, Mayo, Van Otterloo & Co. have both released their quarterly investor letters today. While news is positive on some fronts, and both men see pockets of opportunity, they also h

  4. Investing – Hedge funds expect Netflix earnings to catapult forward, Third Point's Loeb takes stakes in Fibra Uno, YPF, Royal DSM, Lake Capital in talks to back Engine Group[more]

    Hedge funds expect Netflix earnings to catapult forward From Investing.com: Netflix has made major strides forward in 2014 despite ongoing battles with the FCC and cable companies over the issue of net neutrality. The FCC has now received over 500,000 comments from the public on its pend

  5. Opalesque Roundtable: European family offices struggle to retain their investments in offshore hedge funds[more]

    Komfie Manalo, Opalesque Asia: The European Union’s Alternative Investment Fund Managers Directive (AIFMD) will constrain investment opportunities amidst concern a number of U.S. fund managers will stop marketing their products in the European Union under the new rule, said Valentin Bohländer fro