The pace of hedge fund liquidations is on track to reach 700 this year, up 24% from the 563 funds that closed in 2007 but below the previous high of 848 shuttered funds in 2005, according to second-quarter data from Hedge Fund Research. HFR reported that 350 hedge funds closed in the first half of 2008, vs. 305 funds in the first six months of last year.
New hedge fund launches totaled 487 in the same period, HFR researchers said in a report. At that pace, 2008 will have the lowest number of new fund debuts since 2001.
The environment of the last 12 months has been characterized by volatility, performance dispersion and asset consolidation toward the largest hedge fund firms. The top decile of funds has outperformed the bottom decile by more than 75%, the widest spread on record and a trend which is expected to continue, said Kenneth J. Heinz, president of HFR.
HFR analyzed data from the more than 13,000 hedge funds in its database, including more than 7,800 funds that regularly report performance and asset data. HFR estimated that more than 10,200 hedge funds were operating worldwide as of June 30, including more than 7,600 single-manager funds, managing a total of about $1.93 trillion.