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Laxman Pai, Opalesque Asia:

New hedge fund launches increased to an estimated 175 in 4Q20 and exceeded the estimated quarterly liquidations for the second consecutive quarter, after eight quarters of contraction, said a report.

According to the latest HFR Market Microstructure Report, launches in 4Q exceeded the 3Q estimate of 151 new funds, bringing the FY 2020 launches to 539, a period which included a record low number of launches in 1Q as the global pandemic began.

Meanwhile, fund liquidations also increased in 4Q20 to 151, a slight uptick from the prior quarter but also marking a decline of over 50 percent from the 304 liquidations in 1Q20.

For the full year 2020, an estimated 770 funds were liquidated, a small increase over the estimated 738 liquidations in 2019 and the highest full-year total since 784 funds closed in 2017, said the report.

The industry launch trends to finish 2020 appear poised to continue into 2021, as early 2021 performance has been strong. The investable HFRI 500 Fund Weighted Composite Index jumped +14.25 percent in the trailing four months ending February 2021, as the HFRI Fund Weighted Composite Index surged +16.6 percent over the same time frame, the strongest four-month period in over 20 years. The HFRI Equity Hedge (Total) Index led strategy-level performance over the trailing four months with a gain of +21.9 percent, while the HFR Cryptocurrency Index surged +205.6 percent.

As previously reported by HFR, total hedge fund i......................

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