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Alternative Market Briefing

674 hedge funds liquidated this year but launches rise as well

Monday, December 21, 2015

Komfie Manalo, Opalesque Asia:

Hedge fund launches and liquidations both increased in 3Q15, as energy commodities and equities posted sharp declines, and high yield credit spreads began to widen, Hedge Fund Research said.

The latest HFR Market Microstructure Report, released by HFR said that hedge fund liquidations totaled 257 in 3Q15, up from 200 in the second quarter, and the highest quarterly total since 1Q14. Total liquidations in the first three quarters of 2015 stand at 674, up from 661 liquidations during the first three quarters of 2014.

"Hedge fund liquidations rose in 3Q15 as investor risk tolerance fell sharply, and energy commodities and equities posted sharp declines, resulting in net capital outflows, wider performance dispersion and meaningful differentiation between hedge funds," stated Kenneth J. Heinz, President of HFR.

The number of hedge fund launches also rose in 3Q15 despite the market turmoil, with 269 new funds launching, an increase over the 252 launches in 2Q15, though the YTD launch total of 785 in the first three quarters of 2015 represents a YOY decline from the 814 launches in the first three quarters of 2014. Launches were led by equity hedge strategies with 150 launches, although EH also led liquidations with 113 funds shutting down in the quarter.

He added, "Although recent performance declines have narrowed the HFRI to only a narrow gain for 20......................

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