Hedge fund launches were down in the quarter ended Sept. 30 to an estimated 132 from 180 in the second quarter 2021, according to data released Tuesday by HFR.
Despite the decline, launches outnumbered liquidations for the fifth quarter in a row. The number of liquidations declined to 102 for the quarter ended Sept. 30, the lowest since the second quarter of 2006, and down from 149 liquidations in the second quarter.
By comparison, 151 hedge funds debuted and 137 hedge funds were liquidated in third quarter 2020. Prior to that quarter, the hedge fund industry had eight consecutive quarters in which liquidations were higher than new fund launches, HFR data showed.
Kenneth J. Heinz, HFR president, said in a news release announcing the data that rising macroeconomic uncertainty driven by rising inflation, government spending and higher U.S. interest rates has led to the low number of liquidations by institutional investors.
"(Investors) are looking for portfolio capital protections to maintain or increase allocations to existing managers, resulting in a historic low in fund liquidations," Mr. Heinz said.
"These uncertainties continue to drive financial market volatility into year end, with powerful risk-off sentiment dominating through mid-December after industry capital reached historic levels to begin (the fourth quarter)."