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New Managers June 2014

NEW LAUNCHES: Newest maiden hedge fund launches

Hedge fund launches rise and rise

Hedge fund launches rose through early 2014 as new launches in Equity Hedge and Event Driven continued to attract new investors, and total hedge fund capital rose globally to a record $2.7 trillion at the end of the first quarter. New hedge fund launches totaled 289 in 1Q14, up from 244 in the prior quarter, and the highest total since 297 funds launched in 1Q13, as reported in the latest HFRÂ Market Microstructure Industry Report, released by Hedge Fund Research. Hedge fund liquidations totaled 272 for 1Q14, a decline from the 296 closures in the prior quarter but still the second highest quarterly liquidation total since 2Q09.

New fund launches were spread across all strategies, with the highest number of new funds in Equity Hedge and the greatest quarter-over-quarter growth in Event Driven strategies, with both driven by investor interest in the powerful wave of investor interest in Fundamental Value, Special Situations and Shareholder Activist strategies.

Equity Hedge launches totaled 116 in 1Q14, which also experienced the highest number of launches in 2013, with both representing approximately 40 percent of all launch activity. Event Driven launches increased to 56 for 1Q14, nearly 20 percent of all launches; in 2013, ED accounted for only 7 percent of new launches. Since 2007, the number of funds dedicated to Shareholder Activism has increased from 52 to 71, with these collectively managing over $100 billion in investor capital.

Regionally, European located hedge fund launches declined as a percentage of the overall total with 121 in 1Q14, representing 42 percent of all hedge fund launches. In 2013, 581 European located funds were launched, nearly 55 percent of the 1,060 launches in the calendar year...

Average management fees across the entire hedge fund industry declined 2 basis points in 1Q14 from the prior quarter to 1.52 percent, while average incentive fees fell 28 basis points to 17......................

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This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.
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