Thu, Feb 11, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

New hedge fund launches rise on back of record industry asset increase

Thursday, March 14, 2013
Opalesque Industry Update - New hedge fund launches rose at year end 2012, narrowly trailing total launches for 2011 as total hedge fund industry assets increased to a record of $2.25 trillion, according to the latest release of the HFR Market Microstructure Industry Report, released today by HFR, the leading provider of indexation, research and analysis for the global hedge fund industry. New launches totaled 284 in 4Q12, representing the 2nd highest quarter for 2012, while the full year total of 1,108 launches was in line with the 2011 total of 1,113 launches.

Hedge fund liquidations also rose, with 238 funds liquidating in 4Q12 and 873 funds for the full year 2012, the highest since over 1,000 funds liquidated in 2009. Liquidations in 2012 were concentrated in Equity Hedge, with over 300 funds liquidating in the strategy. Launches were distributed across Macro, Relative Value and Equity Hedge strategies.

Index performance dispersion narrowed slightly over 2011, but with substantial improvement in the performance of the top decile of HFRI constituents. The top decile of all HFRI constituents posted an average gain +32.6 percent for 2012, increasing from the record low of +19.5 percent from 2011. The performance decline of the bottom decile narrowed to -16.0 percent from the 2011 decline of -30.7 percent, creating a top bottom decile dispersion of 48.6 percent for 2012. The HFRI Fund Weighted Composite Index gained +6.4 percent in 2012, versus a disappointing decline of -5.25 percent from the prior year.

Management and incentive fees declined industry wide, with average management fees falling by 1 bps to 1.56 percent, while average incentive fees fell to 18.54, a decline of -17 bps for 2012. Fee data shows a mixed trend by vintage year of launch, with funds launched in 2012 charging an average management fee of 1.62, an increase of 1 bps over the prior year; average incentive fees for 2012 launches fell from 18.08 to 17.74 percent.

Leading service providers increased market share over the past year, with Goldman Sachs, J.P. Morgan and Credit Suisse posting gains in Prime Brokerage, while GlobeOp and Citigroup gained market share for Administrators. The law firms of Shulte, Roth and Zabel and Seward & Kissel both experienced market share gains, while PricewaterhouseCoopers and Ernst & Young remained the top choices for Audit firms.

“Despite total industry assets increasing to a record level, the capital raising environment continued to be challenging for emerging managers, including both small and mid-sized funds, as well as newly launched funds. While emerging manager performance has been strong, the bulk of the capital raised in the past two years has been allocated to the industry’s most well-established firms,” stated Kenneth J. Heinz, President of HFR. “In order to raise new investor capital, hedge funds must not only demonstrate both superior performance and an innovative strategy, but also increased organizational efficiencies of competitive fees, transparent structures, sophisticated risk management and satisfaction of extensive institutional due diligence processes. With equity markets at record valuations and historically low fixed income yields, investors are continuing to actively allocate to hedge funds across different strategies and capitalizations, as these powerful trends drive capital flows through mid-2013.”

Press release

bc

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. Credit Suisse cherry picks hedge fund ideas[more]

    From FT.com: Credit Suisse Asset Management plans to cherry pick profitable concepts from hedge funds with the launch in Europe of a “best ideas” strategy. The investment arm of the Swiss bank said the strategy will separate it from other funds blighted by “overcrowding problems”. It comes at a time

  2. Investing - Hedge funds bet on risks in U.S. blue-chip debt, Hedge funds bets against bank credit risk paying off, Tiger Global still likes Internet names, gets pointers from Jeter[more]

    Hedge funds bet on risks in U.S. blue-chip debt From WSJ.com: Hedge funds are betting the next bond sector to crack will be the $4.5 trillion market for the safest U.S. corporate debt. New York’s Perry Capital has placed a $1 billion wager against investment-grade bonds issued by 10 comp

  3. Short Selling - Hedge fund manager Kyle Bass is shorting real estate—again, Top US hedge fund has €80m short position in Paddy Power Betfair[more]

    Hedge fund manager Kyle Bass is shorting real estate—again From Fortune.com: He also predicted the mortgage crisis in 2008. Hedge fund manager Kyle Bass, who runs Dallas-based Hayman Capital, tanked the stock of a little-known real estate financier Friday by revealing that he is shorting

  4. Investing - Real estate secondaries sole 'bright spot' in 2015, As hedge funds stumble, one firm prepares to buy illiquid stakes[more]

    Real estate secondaries sole 'bright spot' in 2015 From IPE.com: The secondary market for property was the sole “bright spot” over the course of 2015, as hedge fund secondaries saw deals fall by two-thirds, according to a wide-ranging survey of the market. Setter Capital said 2015 saw th

  5. Asia - Hedge fund manager Kyle Bass estimates China's foreign reserves below critical level[more]

    From Nasdaq.com: Investor Kyle Bass stepped up his attack on China's currency, arguing in an investor letter distributed Wednesday that the second-largest economy's foreign reserves are "already below a critical level." The comments mark the latest effort by hedge funds and other investors to raise