Hedge fund firm launches totaled 71 in the third quarter, the lowest level since the fourth quarter of 2008 when just 56 firms braved the tough environment brought on by the financial crisis to open their companies, said hedge fund data provider HFR in a report Friday.
By comparison, 80 hedge fund companies opened for business in the second quarter of 2022, while in the third quarter of 2021, 132 hedge fund firms launched.
Hedge fund firm liquidations totaled 145 in quarter ended Sept. 30, lower than the 156 company closures in the prior three-month period and much higher than the 102 liquidations in the third quarter of 2021.
Institutional investors "maintaining significant allocations to (macro and larger hedge funds across various strategies) have benefited from this defensive, conservative positioning, these trends have also contributed to a challenging environment for new and recently launched funds, as overall risk tolerance has declined," said Kenneth J. Heinz, HFR's president, in the report.
"With significant uncertainty and wide disparity in economic outlooks into early 2023, it is likely that both launches and liquidations remain near historic levels as institutions carefully evaluate opportunities and deliberately position portfolios for volatility in 2023," Mr. Heinz added.
As of Sept. 30, hedge fund industry assets totaled $3.78 trillion, down from $3.82 trillion in the prior quarter.