Hedge fund liquidations this year are on target to be the highest since the financial crisis – though investors are more willing to allocate to less established managers.
As liquidations increase, new launches are also falling – yet assets allocated to hedge funds are increasing, meaning fewer funds now manage more money.
According to HFR, a hedge fund researcher and index provider, through the first three quarters of 2016, liquidations totaled 782, which is on pace for the highest number of liquidations since the financial crisis.
New launches totaled 170 in the third quarter (Q3), down from 269 in the year-before quarter, representing the lowest since Q1 2009 and marking the fourth consecutive quarter of net contraction in the overall number of active funds.
In its ‘HFR Market Microstructure Report’, the firm said a total of 576 funds were launched in the first three quarters of 2016, a decline of over 200 from the 785 launches over the same period last year.
HFR recently reported that total hedge fund industry capital increased to a record of $2.98 trillion through Q3.
Kenneth J. Heinz, president of HFR, said: “As a result of the overall increase of industry capital during this period of fund consolidation, the size of the average hedge fund has continued to rise, suggesting that investors are becoming more comfortable and willing to allocate to innovative, emerging managers as a complement to more established holdings.”
©2016 funds europe
