Wed, Aug 23, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Hedge fund launches rise as investor risk tolerance returns

Friday, June 14, 2013
Opalesque Industry Update: The number of new hedge fund launches increased for the fourth consecutive quarter in 1Q13, according to the latest HFR Market Microstructure Industry Report, released today by HFR, the established global leader in indexation, analysis and research for the global hedge fund industry. Hedge fund launches in 1Q13 totaled 297 funds, the third highest quarterly launch total since the beginning of 2008, narrowly trailing only 1Q12 (304) and 1Q11 (298). Hedge fund liquidations declined to 196 in 1Q13 from 211 and 238 in each of the prior two quarters, respectively.

Equity Hedge strategies led 1Q hedge fund launches with 132, as investors and fund managers were encouraged by strong gains in both U.S. and Japanese equities. Macro hedge fund launches totaled 93, while Relative Value Arbitrage RVA saw just 26 new funds launched in the period, following more than 200 such launches in calendar year 2012. Hedge fund launches in Europe exceeded those of the U.S. in 1Q13, with 180 new funds launched by European-located managers in 1Q versus nearly 100 by US-based firms. Hedge fund performance dispersion narrowed over the prior quarter, as the HFRI Fund Weighted Composite Index gained +3.6 percent in 1Q13 and +5.3 for the trailing 12 months ending 1Q13. The top decile of HFRI constituents gained an average of +29.8 percent over this period, while the bottom decile of all funds declined by -17.3 percent, creating a top-bottom decile dispersion of +47.1 percent. For calendar year 2012, both the top and bottom deciles were slightly higher (+32.6 and -16.0 percent, respectively) with dispersion slightly wider at +48.6 percent.

Average management and incentive fees declined for the quarter, with the average management fee falling 1 bps to 1.55 percent, while average incentive fees declined 15 bps to 18.39 percent, their 4th consecutive quarterly decline. Average management fees for funds launched in 1Q13 was 32 bps lower than those funds launched in 2012, while average incentive fees for 1Q13 launches were 17.43 percent, a decline of 31 bps from 2012 launches.

“The strong trend in new launches is consistent with the trends in rising investor risk tolerance and overall hedge fund industry capital reaching record levels,” said Kenneth J. Heinz, President of HFR. “While total industry capital is more indicative of the trends pertaining to the most established managers, new launches indicate strength, conviction and opportunity in small to mid-sized funds. In contrast to 2007, when billion-dollar launches were not uncommon, investors in 2013 prefer allocating to managers which have generated strong performance through several market cycles, rather than committing to a large day-one investment. As investor risk tolerance continues to improve, new fund launches will define the next generation of performance, strategic innovation and capital expansion.”

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. Opalesque Exclusive: Albright Capital puts a value lens on emerging markets[more]

    Bailey McCann, Opalesque New York: Over the past decade, investors have steadily increased investments in emerging markets private funds. Allocations to the cohort have increased from $93 billion in December 2006 to $564 billion in September 2016, according to data from research firm Preqin. Howe

  2. FinTech - Danger: Crowdfunding on the wrong platform could force you to go public[more]

    From LinkedIn.com: Some equity crowdfunding platforms are putting startups at serious risk. Working with a platform that doesn't structure your deal appropriately could jeopardize your ability to raise future capital or worse, force you to become a public reporting company. The emergence of eq

  3. David Tepper says we're 'nowhere near an overheated' stock market[more]

    From Marketwatch.com: Billionaire David Tepper thinks comparing this current stock-market environment with the overheated markets of 1999 is "ridiculous." The hedge-fund manager, who runs Appaloosa Management, told CNBC in a phone interview on Tuesday that the market's record run, notwithstanding la

  4. Opalesque Exclusive: Altegris and Artivest partner on distribution for alternative funds suite[more]

    Bailey McCann, Opalesque New York: California-based investment firm Altegris has partnered with New York-based alternative investments platform Artivest on distribution for $1 billion in alternative funds. The partnership also launches Artivest's capabilities to offer alternative solutions to acc

  5. Investing - Buffett's Berkshire Hathaway will not increase its Oncor offer, Travel-tilting hedge funds are investing in airlines and online travel agencies[more]

    Buffett's Berkshire Hathaway will not increase its Oncor offer From Reuters.com: The energy unit of Warren Buffett's Berkshire Hathaway Inc said on Wednesday it will "stand firm" on its $9 billion offer to acquire 80 percent of Oncor Electric Delivery Company LLC and will not increase it