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Alternative Market Briefing

Hedge fund launches fall again, $1bn funds found to outperform even smaller hedge funds

Monday, March 23, 2015

Komfie Manalo, Opalesque Asia:

The number of new hedge fund launches fell again in 2014, the third consecutive year of decline, while fund liquidations saw their first drop since 2010, according to the latest HFR Market Microstructure Industry Report released by industry data provider HFR. According to the report, hedge fund launches totaled 1,040 for 2014, a decline of 20 funds from the 1,060 funds launched in 2013.

It added that while launches have trended in a narrow range in recent years, they remain well below the peak of 2,073 funds launched in 2005, though nearly double the local trough of 659 launches in 2008.

"Despite the global hedge fund industry having grown to a record capital level of $2.85tln, the competitive environment to launch new funds continues to be challenging, and funds which fail to perform are vulnerable to investor redemptions and, ultimately, closure," stated Kenneth J. Heinz, President of HFR. "In order to be successful, new hedge fund launches must offer compelling, innovative strategies, favorable liquidity and fee terms, top quality structures and services providers, and most importantly, generate strong realized performance. New funds which are able to meet these demanding requirements are likely to emerge as a new generation of industry leaders that drive performance gains and industry capital growth in coming years."


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