New York (HedgeCo.net) – With hedge funds struggling to beat the indices over the last few years, it isn’t surprising to see that hedge fund launches have slowed this year. We have documented how hedged portfolios tend to underperform during strong bullish phases and the last couple of years have been bullish ones. Even with the performance being questioned, the industry as continued to attract assets.

A report from Hedge Fund Research released shows that new fund launches are being opened at the slowest pace in four years. Since the beginning of the year, there have been 516 hedge funds launched with 252 being opened in the second quarter. Pacing for just over a thousand new funds is way down from the 2,040 funds launched in 2014. There were 1,060 funds launched in 2013 and 1,108 funds launched in 2012. If the number of new funds falls below 1,000, that would be the first year below that threshold since 2010.

The industry slowdown could be due to several reasons—the performance we mentioned earlier, tighter regulations and greater expectations from investors. The industry has also been under fire from the media and politicians due the current tax regulations.

Rick Pendergraft
Research Analyst
HedgeCoVest