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

HFR: Hedge fund launches declined through mid-2012; 245 in 2Q, down from 304 in 1Q

Thursday, September 13, 2012
Opalesque Industry Update – Hedge fund launches declined through mid-2012, as managers prepare for increased reporting requirements and investor demand for institutional infrastructure continues to increase, according to HFR, the global leader in the indexation, analysis and research of the global hedge fund industry. According to today’s release of the HFR Market Microstructure Industry Report, hedge fund launches totaled 245 in 2Q12, down from 304 in the prior quarter and representing the lowest quarterly launch total since 4Q10.

Hedge fund liquidations also declined from the prior quarter to192 funds, although 1H12 liquidations exceeded the first half of 2011 by 14 percent.

Industry performance declined in 2Q12, with the HFRI Fund Weighted Composite Index falling -2.8 percent for the quarter, though performance improved through August-end, with the Index gaining +1.7 percent in the first two months of the third quarter.

Performance dispersion between the best and worst performing funds also narrowed in 2Q, with the top decile of HFRI constituents reporting an average gain of 7.0 percent, while the bottom decile reported an average decline of -16.2 percent, creating a top-bottom decile dispersion of 23.2 percent. In the trailing 12 months ending 2Q12, the top decile of funds reported an average gain of 18.4 percent while the bottom reported an average decline of -31.1 percent, a dispersion of 49.5 percent. Comparatively, in the volatile years of 2008 and 2009, dispersion between best and worst performing deciles exceeded 100 percent.

With minor fluctuation between strategies, average management fees industry-wide remained unchanged at 1.57 percent, although management fees for hedge funds launched in 2012 rose to 1.65 percent. Similarly, incentive fees rose industry-wide by 4 basis points to 18.76 percent, while incentive fees for funds launched in 2012 rose to 18.23, a 15 basis point increase over fees for funds launched in 2011. Nearly 40 percent of all funds charge management fees between 1.51 and 2.0 percent, while over 80 percent charge incentive fees between 16 and 20 percent.

“New fund launches through mid-2012 declined from the prior year as a result of three factors: weak performance in 2Q12, continued low levels of investor risk tolerance and uncertainty surrounding increased reporting requirements and infrastructure costs,” stated Kenneth J. Heinz, President of HFR. “Despite total hedge fund industry assets rising to a record level of $2.14 trillion in the first half of 2012, the capital raising environment continues to be challenging, particularly for small to mid-size funds. Increased certainty about regulation, reporting and marketing, as well as a normalization of investor risk tolerance, is likely to result in more fund launches and improved capital raising conditions through the second half of the year.”

(press release)

HFR (Hedge Fund Research, Inc.) is the global leader in the alternative investment industry, specializing in the indexation and analysis of hedge funds. 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. 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

  2. Hedge fund manager Winton Capital making headway with long-only strategy[more]

    From PIonline.com: North American investors are helping Winton Capital Management Ltd. make progress — albeit slowly — toward its founder's goal of becoming a $100 billion company. The firm's ticket to quadrupling its assets under management is unlikely to be one of its scientifically designed manag

  3. Opalesque Radio: Now is a good time to buy protection cheaply in the options market[more]

    Benedicte Gravrand, Opalesque Geneva: Investors are showing an increased interest in risk parity funds and strategies, Opalesque reported last year. Risk parity strategies have the

  4. The Big Picture: Charlemagne Capital smoothes risk out of frontier market investing with portfolio approach[more]

    Benedicte Gravrand, Opalesque Geneva: Opalesque recently talked to one of the portfolio managers of the Oaks funds, which are emerging and frontier market hedge funds focusing on equity long/short with a directional approach. They are run by

  5. Winton’s low-cost equities fund tops $1bn for first time[more]

    From FT.com: Winton, the London-based hedge fund, has increased the assets in its low-cost equities fund to more than $1bn for the first time in a sign that traditional stock managers may come under increasing pressure from computer-driven rivals. Winton, which manages about $25bn in total ass