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Hedge fund closures keep rising

Financial Times – The number of hedge funds going out of business rose for the third year in a row in 2012, according to HFR, a data provider. Last year, 873 funds failed or closed their doors out of the estimated 9,800 total, against 775 in 2011 and 743 in 2010.

Those closures were offset by 1,108 new hedge fund launches, slightly down on the 2011 total. The pace of launches has recovered from the low of 659 funds in 2008, but the rate still lags behind the boom years of 2004 to 2007.

“The environment for launches remains very difficult,” said Anne-Gaelle Pouille, a director for Paamco, a fund of funds group that specialises in small hedge funds with less than $1bn in assets at launch.

Ken Heinz, HFR president, said that for the average hedge fund, “the last two years have been a wash. If you look at the whole HFR Index, you are barely up over a two-year period”.

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