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New Managers October 2019

BULLETIN: New hedge fund launches on the rise for second consecutive quarter

 

New hedge fund launches increased for the second consecutive quarter, with launches through midyear 2019 on a pace that could see the industry top launches from calendar year 2018. Launches totaled an estimated 153 in 2Q19, bringing the 1H total to 289 new funds, according to the latest HFR Market Microstructure Report, released today by HFR, the established global leader in the indexation, analysis and research of the global hedge fund industry. The 1H19 launches put the industry on pace to top the 561 launches from last year, which represented the lowest annual total for new funds since 2000. Fund liquidations declined but remained elevated on a calendar year basis, with liquidations falling to 186 funds, down from 213 in 1Q19. 1H19 liquidations totaled 399 funds, the highest annualized pace of liquidations since 1,016 funds closed in 2016.

2Q19 also represents the fourth consecutive quarter in which liquidations exceeded launches, although the net decline of -33 funds in in the industry was smaller than the prior quarter. The HFRI Fund Weighted Composite Index (FWC) advanced +7.4 percent YTD through August 2019, led by the +9.8 percent gain in the HFRI Macro (Total) Index. The HFRI FWC performance through August represents the highest return in the first eight months of a year since 2000, while the Macro Index performance is the highest over that time frame since 2003. Hedge fund performance dispersion continued to narrow in 2Q19, as the top decile of HFRI constituent performance (+10.1 percent) declined sharply from the top decile in 1Q19 (+21.1 percent), while the bottom decile of constituents in 2Q (-6.2 percent) was only slightly below the bottom decile in 1Q (-5.8 percent).

The top/bottom dispersion of 16.5 percent in 2Q19 represents a dispersion decline of over 1000 basis points over the 1Q dispersion of 26.9 percent. The 12-month rolling decile dispersion also narrowed over calendar year 2018, with both top and bottom deciles improv......................

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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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