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New Managers January 2020

BULLETIN: New hedge fund launches decline to lowest level since 4Q 2008 despite steady flow of new European funds


New hedge fund launches decline to lowest level since 4Q 2008 despite steady flow of new European funds New hedge fund launches declined in 3Q, reversing the trends of the first half of the year, with the number of launches falling to the lowest level since 4Q08, despite a steady flow of European-located new launches. Launches totaled an estimated 102 in 3Q19, bringing the YTD total to 391 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 YTD launch total puts the industry on pace to fall below 500 new launches for 2019, which would represent the lowest annual total for new funds since 328 funds launched in 2000. European-located funds led launches not only in 3Q, but extended a trend observed so far throughout 2019. In the quarter, 76 of the 102 launches were from European-located firms, while for the year, 285 of the 391 launches (73 percent) were from European-located firms.

Overall fund liquidations declined sharply from the prior quarter, as 141 funds closed their doors in 3Q, compared to 186 liquidations in the prior quarter and 174 liquidations in 3Q18. For the year, 540 funds have liquidated, which is on-pace to exceed last year's liquidation total of 659, though it would also represent the second-lowest calendar year liquidation total since 2007. The third quarter 2019 represents the fifth consecutive quarter in which liquidations exceeded launches, although the net decline of -39 funds in the industry was the second smallest net decline over those five quarters. The HFRI Fund Weighted Composite Index (FWC) gained +8.5 percent YTD through November 2019, led by the +11.2 percent gain in the HFRI Equity Hedge (Total) Index. With these gains, the HFRI FWC performance is on pace for the highest calendar year performance since 2010. Hedge fund performance dispersion remained compressed but widened ......................

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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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