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New Managers March 2012

A recapitulation of maiden launches in late February and early March 2012

1,113 hedge funds launched, 775 liquidated in 2011: HFR

2011 the strongest year for new launches since the global financial crisis, said Kenneth J. Heinz, President of Hedge Fund Research (HFR), a Chicago-based data provider.

He added: "While some have suggested that increased regulation may deter new fund launches, many hedge funds are launching not only as a result of increasing investor risk tolerance, but also as a result of these regulatory changes to trading activities and risk oversight at financial institutions. The hedge fund industry has and will continue to expand and innovate to offer more sophisticated and transparent strategies to meet the requirements of institutional investors."

These words of encouragements, issued in March, came with the following figures:

  • Hedge fund launches (from new and established managers) totalled 1,113 in 2011 (including 270 in 4Q11), the highest calendar year total since 1,197 funds were launched in 2007.
  • Fund liquidations declined from 3Q, with 190 liquidations in 4Q11. 775 funds liquidated during the year - a bit more than the 743 that did it in 2010.
  • The total number of funds rose to 9,523 in 2011, while total hedge fund industry capital rose by 3% from 2010 to $2.02tln.
  • New fund launches in 2011 were concentrated in Equity Hedge and Macro strategies, with 479 and 265 fund launches, respectively (although Equity Hedge also experienced a high rate of liquidations, with 293 funds closing).
  • Attrition in Fund of Hedge Funds declined to a pre-financial crisis level; FOF experienced 215 closings in 2011, the fewest liquidations since 2007.
  • Slightly more funds were launched in the US than Europe, while liquidation......................

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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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