Hedge fund liquidations outpaced launches for the fifth consecutive quarter, data released Friday from Hedge Fund Research show.
HFR said 141 managers liquidated their funds in the third quarter, compared with 186 in the second quarter and 174 in the third quarter of 2018.
Hedge fund launches, meanwhile, totaled 102 in the quarter ended Sept. 30, compared with 153 launches in the previous quarter and 144 in the third quarter of 2018.
The 391 hedge fund launches year-to-date through Sept. 30 put the industry on pace to fall below a total of 500 launches for the year, the lowest total since 328 hedge funds launched in 2000.
The 540 hedge fund liquidations year-to-date through Sept. 30 was on pace to exceed the 659 liquidations for all of 2018.
Kenneth J. Heinz, president of HFR, said in a news release announcing the data that it is likely that the number of launches will increase for the fourth quarter as a result of "increased investor risk tolerance."
However, "it is also likely for launches to rise and liquidation to continue to fall as institutional investors position for increasing geopolitical risks in 2020, with these led by the U.S. election, Brexit, and inevitable interest rate increases from suppressed or, in many cases, still negative levels. Funds positioning for these risks and opportunities are likely to lead performance and attract investor capital for both new and existing products in early 2020."
