Seward & Kissel, the law firm that helped create the first hedge fund in 1949, announced its second annual study of New Hedge Funds in the U.S.
The New Hedge Fund Study: 2012 Edition, has revealed that 64% of new funds covered by the study had equity or equity-related strategies, up 14% from the 2011 study.
Of the 64% of new funds involved in equity or equity-related strategies, Seward & Kissel found that about 55% were focused on U.S. and North American equities and approximately 30% had a sector focus, with the most popular sector focuses being healthcare and TMT.
– In 2012, 64% of new hedge funds had equity or equity-related strategies (up 14% from the 2011 study).
– Management fees were generally higher for non-equity strategies, while incentive allocation rates continued to be pegged at 20% of annual net profits across all strategies.
– More funds permitted monthly redemptions in 2012 as compared to 2011 (the percentage increased from about 25% in 2011 to 36% in 2012), and a higher percentage of equity strategies had lockups or gates as compared to non-equity strategies.
– Sponsors of both U.S. and offshore funds set up master-feeder structures over 80% of the time. Most offshore funds were established in the Cayman Islands.
– In the area of seed capital, the initial funding in many of the bigger deals was between $75 million and $150 million typically locked up for two or three years; for the smaller deals, the amounts ranged from $10 million to $50 million. The full study is available here.