New hedge fund launches accelerated into 2H25 while historical low liquidations fell further, as investors positioned for falling geopolitical risk and lower interest rates, while M&A and AI strategic investment surged into 2H25. The estimated number of new funds launched in 2Q25 rose to 141, bringing the first half 2025 total to 262, on pace to top the estimated 479 launches in 2024, which was the highest annual total since 2021, according to the latest HFR Market Microstructure Report, released by HFR®, the established global leader in the indexation, analysis and research of the global hedge fund industry. Historically low liquidations fell further over the same period, with only an estimated 65 funds closing in 2Q25, bringing the first half total to 138, and pacing the year to fall below the estimated 406 liquidations in 2024, which was the lowest level since 2004. As previously reported by HFR, total hedge fund industry capital reached another record level to begin 2H25, surging to an estimated $4.74 trillion.

By strategy, Equity Hedge (EH) led new launches in 2Q25, with an estimated 60 new EH funds opening its doors, followed closely by Macro, which saw an estimated 54 new funds launched in the second quarter. EH also represented the largest number of liquidations in the quarter, as an estimated 25 EH funds shut down in 2Q, increasing its 1H25 total to 53 liquidations for the strategy.

The performance dispersion of the HFRI Fund Weighted Composite Index® (FWC) expanded in 2Q25, as the top decile of index constituents returned an average of +21.2 percent, while the bottom decile declined by an average of -9.8 percent, representing a top/bottom decile dispersion of 31.0 percent, compared to the estimated top/bottom dispersion of 25.8 percent in 1Q25. For the trailing 12 months ending 2Q25, the top decile of FWC constituents returned an average of +34.5 percent, while the bottom decile declined by an average of -17.6 percent, representing a top/bottom d......................

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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.