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New Managers December 2017

PERSPECTIVES: New hedge fund launches exceed closures for the first time in two years, Investors eye multi-asset strategies

 

New hedge fund launches exceed closures for the first time in two years

The year 2017 is proving to be the year of recovery for the hedge fund industry not only in terms of strong performance, but also in regaining investors' confidence, according to the latest data released by Hedge Fund Research.

"2017 has been a recovery year for the hedge fund industry from 2016, with improved performance, exciting strategy expansion and lower costs driving new fund launches and total industry capital to a new record," stated Kenneth J. Heinz, President of HFR.

For the first time in over two years, the number of hedge fund launches exceeded liquidations on a quarterly basis as improved investor risk tolerance and declining costs drove total hedge funds industry capital to a record $3.16tln in 3Q17. New fund launches totaled 176 in the quarter, narrowly exceeding the 170 launches recorded in same quarter last year and bringing the year-to-date (YTD) total to 545 funds, according to the latest HFR Market Microstructure Report.

At the same time, the number of liquidations fell sharply in the period to 137, representing a steep and favorable decline over both the prior quarter's total of 222, as well the 252 liquidations in 3Q16. Year-to-date through September 30, there were 618 liquidations and 545 launches, a substantial narrowing over FY 2016, when 1,057 funds liquidated and 729 were launched

Crypto-focused hedge funds to lead expansion in 2018

According to Heinz, hedge fund expansion would also be driven by cryptocurrency and blockchain focused strategies as the bitcoin mania has grown exponentially the past couple of months, dragging along other crytocurrencies up.

He added, "We had anticipated a continuation of this favorable trend in new launches which we expect to continue with the added ta......................

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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.
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