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Alternative Market Briefing

Hedge fund liquidations increased by 20% in 2020

Thursday, January 21, 2021

Laxman Pai, Opalesque Asia:

Hedge Fund launches have remained steady in recent years, but the number of fund liquidations increased nearly 20% last year compared to 2019 (from 66 liquidations in 2019 to 79 in 2020), said a study.

According to Pivotal Path's annual review of launches and liquidations, it tracked the same number of institutional fund launches in 2020 as it did in 2019 (62 launches in both years). However, during this same period, fund liquidations increased from 66 in 2019 to 79 in 2020.

Over the past two years, marked by drastically different events and market dynamics, Equity Sector and Equity Diversified strategies constituted the top two buckets for both liquidations and launches.

"Unsurprisingly, we see a relationship between performance and fund launches. In 2020, Equity Sector topped both lists, accounting for 47% of the year's total launches, and returning 24.7% for the year," it said.

Equity Sector clocked 2019's highest returns as well, finishing the year at 15.6% to Equity Diversified's 12.7%. While Equity Diversified launches exceeded Equity Sector in 2019, that trend reversed in 2020.

Half of the funds that launched in 2020 did so with less than $100M in assets under management. However, the other half launched with $100M+ in AUM.

Without in-person diligence as an option for most of the year, some investors proceeded to allocate based on research conducted in-person before March of 2020. Others learned......................

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