Hedge fund launches declined in the first half of 2012: HFR

Hedge fund launches declined through mid-2012, as managers prepare for increased reporting requirements and investor demand for institutional infrastructure continues to increase, Hedge Fund Research (HFR) reported. Hedge fund launches totaled 245 in 2Q12, down from 304 in the prior quarter and representing the lowest quarterly launch total since 4Q10. Hedge fund liquidations also declined from the prior quarter to 192 funds, although 1H12 liquidations exceeded the first half of 2011 by 14%.

"New fund launches through mid-2012 declined from the prior year as a result of three factors: weak performance in 2Q12, continued low levels of investor risk tolerance and uncertainty surrounding increased reporting requirements and infrastructure costs," stated Kenneth Heinz, President of HFR. "Despite total hedge fund industry assets rising to a record level of $2.14 trillion in the first half of 2012, the capital raising environment continues to be challenging, particularly for small to mid-size funds. Increased certainty about regulation, reporting and marketing, as well as a normalization of investor risk tolerance, is likely to result in more fund launches and improved capital raising conditions through the second half of the year."

The number of Emerging Markets (EM) hedge funds reached a record high in 2Q12, overcoming the headwinds of volatile performance and investor redemptions, HFR reported earlier. The total number of EM hedge funds increased to 1,073 funds, approximately 14% of all hedge funds and an increase of 3.5% since 2Q11. Despite the increase in the num......................

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This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.