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Hedge Funds

HFR: Hedge fund launches outpace liquidations for second straight quarter

Hedge fund launches exceeded closures for the second quarter in a row, data by Hedge Fund Research showed.

In the quarter ended Dec. 31, 190 new hedge funds started trading, up 8% from the previous quarter and up 24% from 153 funds in the fourth quarter 2016.

Growth in the total number of new fund launches was essentially flat over the year ended Dec. 31, with 735 new funds in 2017 and 729 in 2016.

Hedge fund closures were up 21% to 166 in the three months ended Dec. 31, but down 40% from 275 in the fourth quarter 2016.

A comparison of hedge fund liquidations through the calendar year showed a 26% decline to 784 funds from 1,057 fund closures in 2016.

The number of hedge fund liquidations in 2017 was the lowest since 2011 when HFR reported 775 closures in that year, noted Kenneth J. Heinz, HFR's president, in a news release accompanying the data, released March 23.

The total number of hedge funds was down by a slight 0.5% to 9,754 as of year-end 2017, compared to 9,803 as of Dec. 31, 2016.

"The prevailing financial market environment in 2018 represents a shift from the pro-equity environment of 2017 with transitional politics driving transitional economics, which has expanded the opportunity set for hedged, long/short investing," Mr. Heinz said.