Last year was the worst since 2010 for hedge fund launches and the worst since 2009 for hedge fund liquidations, according to data released Tuesday by Hedge Fund Research.
New hedge fund startups totaled 1,060 in 2013, compared to 1,108 in 2012, 1,113 in 2011 and 935 in 2010, HFR data showed. By strategy, the equity hedge fund strategy category showed the most growth with 428 new funds started followed by macro funds with 256 startups.
By contrast, shuttered hedge funds totaled 904 in 2013, up from 873 in 2012, 775 in 2011, 745 in 2010, and down from 1,023 in 2009. As with launches, the equity hedge strategy category led the liquidation pace in 2013 with 341 funds closed. Macro strategy vehicles were a distant second with 213 funds closed last year.
Despite encouraging net inflows to funds through year-end 2013, “data on launches and liquidations suggests the capital-raising environment for mid- to small- (sized) hedge funds continues to be challenging,” said HFR President Kenneth J. Heinz, in a news release.
“New funds are faced with the combined challenges of generating performance to attract investors while offering … institutional infrastructure (and) competitive fee terms,” Mr. Heinz added.