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Laxman Pai, Opalesque Asia, for New Managers: Going by numbers from the first three quarters of this year, new hedge fund launches will 'likely' end the year at their lowest in 24 years amid tough fundraising conditions, said a study.
According to a Preqin report, by the third quarter of 2024, hedge fund managers opened 123 new funds, the lowest number since at least 2000 when total launches reached 191.
Hedge fund debuts peaked at 697 in 2017, according to Preqin data.
Equity strategy funds dominate new hedge fund offerings, but the number of niche funds available has more than doubled over the past five years, from 730 in 2019 to 1,570 in 2024.
Adding to this, the number of multi-strategy fund launches grew at an annual rate of 4% from 2017 to 2024 by Q3, with these funds becoming more popular and second only to niche strategies.
Fund closures in the first nine months of 2024 also fell to their lowest in a decade, said Preqin.
The smaller pool of new funds "is likely a byproduct of the drop in interest from investors, who are increasingly favoring experienced managers over less seasoned professionals," said Preqin researchers including Charles McGrath and Salik Ahmed.
"Investors not happy with the current arrangements have been demanding that hedge fund managers introduce hurdle rates within their performance fee structures, so that they may only charge these fees if performance is above the threshold, a factor in the...................... To view our full article Click here
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