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Matthias Knab, Opalesque for New Managers: Both new hedge fund launches and liquidations fell sharply through mid-2026, as investors positioned for sharply higher interest rates, growing tensions around AI acceleration and continued geopolitical risks affecting energy markets and global supply chains. That is the finding of the latest HFR Market Microstructure Report.
An estimated 100 new funds launched in 2Q26, down sharply from 166 launches in 1Q26. For the full year 2025, launches totalled 561, the highest annual figure since 2021.
Liquidations also fell sharply. An estimated 70 funds shut down in 2Q26, after an estimated 129 liquidated in 1Q26, the highest quarterly total since 2Q24. Total hedge fund industry capital, as previously reported by HFR, reached a record of an estimated $5.63 trillion through 2Q26.
"Hedge fund liquidations and launches both fell sharply through mid-2026 in response to accelerating market volatility, which was driven by sharp increases in global interest rates, as well as other ongoing risks," said Kenneth J. Heinz, President of HFR. "Trends in both launches and liquidations indicate a more challenging capital raising environment for new and emerging managers, as the propensity of investors to maintain or increase allocations to larger, more established managers persists, particularly to funds in the Macro strategy, which have generated strong performance through the surge in interest rates."
Equity Hedge and Macro lead both sides
Equity Hedge led new launches, with an estimated 40 new funds in 2Q26, followed by Macro with 27. The same two strategies also led liquidations: an estimated 31 Equity Hedge funds and 20 Macro funds closed during the quarter.
Dispersion widens
Performance dispersion across the HFRI Fund Weighted Composite Index widened in 2Q26. The top decile of index constituents returned an average of +31.6%, while the bottom decile declined an average of -8.7%. That gap of 40.3 percentage points compares with 30.1 points in 1Q26.
Fees
The average industry-wide management fee was unchanged in 2Q26 at an estimated 1.32%, while the average incentive fee ticked down slightly to an estimated 15.74%. Funds launched in 2Q26 charged slightly more than the previous quarter's launches, with an average management fee of an estimated 1.26% and an average incentive fee of 17.5%.
Service providers
HFR estimates that Goldman Sachs and UBS led prime brokers by assets under management at the end of 2Q26. SS&C GlobeOp, Citco Fund Services, IFS State Street and Northern Trust remained the top hedge fund administrators.
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