Hedge fund launches were up slightly in the first quarter to an estimated 189 from 175 in the fourth quarter 2020, according to data released Wednesday by Hedge Fund Research.
The estimated launch rate for hedge funds in the quarter ended March 31 was the highest since 2017's fourth quarter, when 190 new funds opened for business.
The hedge fund launch rate in the first quarter was the third-consecutive quarter in which the number of newly opened hedge funds was higher than the number of liquidations, HFR researchers said in a report accompanying the data.
By comparison, prior to third quarter 2020, the hedge fund industry suffered eight consecutive quarters in which hedge fund liquidations were higher than new fund launches, HFR data showed.
Hedge fund launches in in the first quarter exceeded the fourth quarter estimate of 175 new funds, implying an annualized launch rate for all of 2021 "well in excess" of the 539 hedge fund launched in 2020, said HFR researchers in the report.
They stressed that 2020 included "a record-low number of launches in (first quarter 2020) as the global pandemic began."
Hedge fund liquidations in the first quarter 2021 were up slightly to an estimated 159 funds from 151 closures in the last quarter of 2020, HFR reported.
In the report, HFR noted the "slight uptick" in hedge fund closures in the first quarter, but stressed that the 159 hedge fund liquidations represented a decline of nearly half (47.7%) of the 304 closures in the first quarter of 2020.
The pace of liquidations in the first quarter of 2020 was the second highest quarterly rise since the fourth quarter of 2015 when an estimated 305 hedge funds closed, HFR data showed.
"Strong hedge fund performance accelerated industry growth to begin 2021, including both new fund launches and a record level of total industry capital ($3.8 trillion as of March 31, 2021) as investors positioned themselves for trends toward increasing inflationary pressures and surging trade volumes from individual investors," HFR President Kenneth J. Heinz said in the report.