Global hedge fund launches plunge, liquidations rise amid turmoil

Global hedge fund launches plunge, liquidations rise amid turmoil
FILE PHOTO: A trader looks at a screen that charts the S&P 500 on the floor of the New York Stock Exchange (NYSE) in New York, U.S., April 27, 2017. REUTERS/Brendan McDermid

NEW YORK : New hedge fund launches dove in the second quarter to the lowest level since the 2008 global financial crisis, while fund liquidations spiked, industry data provider HFR said on Friday.

There were 80 hedge fund launches between April and June, down 57 per cent from the first quarter and the lowest number of new funds since the fourth quarter of 2008, when 56 funds were launched, according to HFR

Another 156 hedge funds closed their doors between April and June, 24 per cent more liquidations than the previous quarter. Overall, the number of hedge funds fell to 9,237 in the second quarter from 9,313.

“Risk-off sentiment drove investor risk aversion, with investors maintaining exposures to established funds through the current volatile market paradigm of unprecedented geopolitical and macroeconomic uncertainty,” said Kenneth J. Heinz, president of HFR.

The data underscores the challenges faced by the hedge fund industry in 2022 amid market turmoil, with $7.7 billion in net outflows in the first half of the year.

Still, hedge funds on average have outperformed the S&P 500. The HFRI fund-weighted composite index is down 4 per cent this year through August, while the S&P plunged 17 per cent in the same period.



Source: Reuters