Sat, May 23, 2015
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. Comment - Top hedge fund managers talk about how easy their jobs have gotten, BlackRock to Schroders warn of Argentina’s $20bn bond glut, The 35-year “investment supercycle” is drawing to a close, says Bill Gross, Gundlach: When the Fed starts hiking rates, 'GET OUT' of this asset class[more]

    Top hedge fund managers talk about how easy their jobs have gotten From Businessinsider.com.au: Time was, before the financial crisis hit, corporate boards treated multi-billion dollar hedge fund managers like Jehovah’s Witnesses pounding on their doors and flashing bibles. But no more.

  2. T Rowe's challenge to Dell deal may fuel critics of 'appraisal'[more]

    From Reuters.com: An increasingly popular tactic used by hedge funds and others to extract more money from buyouts could soon face a major courtroom test when a big investor in Dell Inc may argue that it should be paid a higher price for the 2013 acquisition of the PC maker. The strategy, known as "

  3. News Briefs - Ergen says LightSquared plan unfairly favors hedge funds, Why hedge fund managers make good advisory clients, I learned a lot about dad-bros after spending 4 days in Vegas with 2,000 hedge funders[more]

    Ergen says LightSquared plan unfairly favors hedge funds LightSquared Inc.’s bankruptcy plan gives hedge funds that invested in the broadband company a leg up while blocking telecommunications firms from competing with it, a fund owned by Dish Network Corp. Chairman Charles Ergen said in

  4. Opalesque Exclusive: SEC approves proposed changes to Form ADV, '40 Act - comment period to follow[more]

    Bailey McCann, Opalesque New York: Hedge funds and providers of liquid alternatives will want to pay close attention to proposed reforms approved by the SEC yesterday. The changes will require more frequent reporting, as well as a closer look into social media, liquid alternative strategies, and

  5. New market regime has created more dispersion between managers[more]

    Komfie Manalo, Opalesque Asia: The month of April has marked the transition toward a new market regime, Philippe Ferreira, Lyxor AM’s head of research, managed account platform, commented in the May 5's Weekly Briefing. "The first quart

 

banner