HFR reported much lower hedge fund industry net inflows and positive market gains in the third quarter partially due to lower performance.
Hedge fund launches and liquidations were moderate in the second quarter, HFR data showed.
Renaissance Technologies executives will pay $6.8 billion in an IRS settlement over past options use in the firm's flagship Medallion Fund.
Hedge fund allocations rose in the first half of 2021, as investors sought returns and diversification to offset low fixed-income returns.
HFR reported a 4% return for its flagship index in the quarter ended June 30, trailing the return for the prior quarter.
The hedge fund launch rate in the first quarter exceeded the number of liquidations for the third consecutive quarter, with 189 new funds.
Troubled Infinity Q Capital Management will liquidate its hedge fund in addition to its mutual fund because of mispriced valuations.
Hedge fund managers are optimistic about 2021 given market opportunities and nascent investor interest in hedge funds as a bond substitute.
Retail investors' frenzied attack on short sellers has pushed some hedge funds to rethink their strategies.