Hedge funds and hedge funds of funds in 2011 had the second most launches for any year with a total of 1,113 new starts, topped only by the 2,073 nascent funds in 2005, according to data released Tuesday by industry tracker Hedge Fund Research.
In 2010, 935 new hedge funds/funds of funds were opened.
Combined hedge fund and hedge funds of funds numbered 9,553 at the end of 2011, the second highest total since year-end 2007, when there were 10,096 funds operating globally, HFR's research showed. Of the 2011 total, 7,552 were single and multistrategy hedge funds and 2,001 were hedge funds of funds.
Hedge fund numbers continue to rebound from the dip in 2008 when fund numbers dropped to 6,845 from the all-time high of 7,634 funds at year-end 2007.
By contrast, the number of hedge funds of funds continues to decline from the all-time high of 2,462 at the end of 2007. At 2,001, the hedge funds-of-funds universe as of Dec. 31 is the smallest since 2005, when there were 1,996 funds in operation.
Despite the overall increase in fund starts in 2011, the 775 hedge fund and funds-of-funds liquidations last year still represented a slight increase from the 743 fund closures in 2010, said HFR in a news release.
The HFRI Fund Weighted Composite index declined -5.26% in 2011, a factor that did not unduly deter investors.
“Despite performance volatility and macroeconomic uncertainty in the second half of the year, investors maintained a strong commitment to hedge funds and fund managers expanded the scope and breadth of strategies offered, making 2011 the strongest year for new launches since the global financial crisis,” said Kenneth J. Heinz, president of HFR, in the release.