Hedge fund launches & liquidations speed up

Data published by Hedge Fund Research suggest that launches and liquidations of such funds increased in the third quarter of 2015, driven by factors such as sharp falls in energy commodities and equities and widening high yield credit spreads.

Liquidations recorded hit 257 over the period, up from 200 in the seconnd quarter, HFR said. Liquidations of hedge funds over the first nine months of 2015 hit 674, up from 661 over the same period last year.

The number of launches rose to 269 compared with 252 in the second quarter. Most launches were in the area off equity hedge strategies – 150 – although the sector also led with the highest number of liquidations – 113.

Dispertion of performances also increased during the third quarter, with the top decile of funds in the HFRI Fund Weighted Composite Index gaining 9.3% on average over the period, but the bottom decile losing -21.5% on average.

Kenneth Heinz, president of HFR, said: “Hedge fund liquidations rose in 3Q15 as investor risk tolerance fell sharply, and energy commodities and equities posted sharp declines, resulting in net capital outflows, wider performance dispersion and meaningful differentiation between hedge funds.”

“Although recent performance declines have narrowed the HFRI to only a narrow gain for 2015 through November, many hedge funds which have been conservatively and defensively positioned have posted strong gains for investors through this period of financial market stress. Anticipating a challenging environment in 2016, dominated by the headwind of rising US interest rates, it is likely that funds which have demonstrated their value proposition in recent months will continue to attract new investor capital with strong, uncorrelated performance gains in the new year.”


Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 17 years he has been based in London writing about funds and investments. From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope. Jonathan was awarded Editor of the Year at the Professional Publishers Association (PPA) Independent Publisher Awards 2017. Shortlisted for the same in 2016, he was also shortlisted in 2017 and 2015 for the broader PPA Awards category Editor of the Year (Business Media).

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