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Forbes – Hedge fund managers (and would-be hedge fund managers) may finally have reason to celebrate this year — new fund launches are on the rise. If they keep up at this pace, it could be the first year since 2005 to show some annual growth in new fund formations.
This is on the heels of 2,100 hedge fund failures since the credit crisis. That some managers are dusting off and trying again could be a sign that the smart money sees some opportunity in the markets. It might also be that funds that had posted huge losses closed down so that the managers could start with fresh records, resetting high-water marks so that they can collect performance bonuses without making up the money lost in 2008.
The hedge fund industry continues to shrink — though the pace is slowing a bit, according to the latest report from Hedge Fund Research Inc.
During the three-month period ended June 30, the industry saw 182 launches and 292 liquidations, a net decrease of 110 funds.
The number of hedge funds fell to 8,946, according to Hedge Fund Research, which calculated the attrition rate at 3.2% for the second quarter and 4% for the first quarter.
New York (HedgeCo.net) – Preliminary reporting from Eurekahedge finds that August marks the 6th consecutive month of positive returns for hedge funds (up 13.1% YTD); hedge funds up 2.6% for the last 12 months, while the MSCI AC World Index is down 18.5% for the same period.
Net inflows for hedge funds reached $4.5 billion in August, with over 50% of the reporting funds attracting capital during the month.
Most hedge funds recorded gains averaging close to or over 2% during August, with European managers (2.6%) delivering the best gains, on average. North American and Latin American funds ended the month with gains averaging 1.8% and 2.1%. Asian managers, on the other hand, underperformed most others, with Japan-specific funds up 0.7% and their Asia ex-Japan-investing counterparts down 1.1%.
There were over 300 new hedge fund launches and 400 fund closures confirmed by Eurekahedge so far this year.
Alex Akesson
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NASDAQ – The pace of new European hedge fund launches has stalled this year after the industry’s dismal 2008 performance made investors unwilling to back new ventures.
Data provider EuroHedge Monday said just 47 funds started trading in the first six months of the year, the least in a decade and less than half the number in the same period of 2008. The new funds collectively raised $2.09 billion – a figure that in "normal" times might have been raised by one fund alone.
However, EuroHedge said there are signs the second half could be more fruitful, with several high-profile funds already started or in the pipeline. Those include Theleme, a global equities strategy being set up by Patrick Degorce, a co-founder of The Children’s Investment Fund who left to strike out on his own, and Gyldmark Liquid Macro Fund, a fund started by former BlueCrest Capital portfolio managers.
Opalesque – Last week, we heard of fund launches from Galena (energy); Verulam (commodity); Twin Tree; Paulson & Co (distressed property); Abax (Asia macro); Odey (Ucits III); Pictet (agriculture); and Liontrust (European).
The Canadian Hedge Watch Hedge Fund Composite Index was up 2.26% in April (+4.66% YTD); RBC Hedge 250 Index 2.37%, 2.6% YTD; Morningstar 1000 Hedge Fund Index 3.4% (est.), 3.11% YTD; Lyxor’s investable Global Hedge Fund index -0.45%, 0.93% YTD; Greenwich Global Hedge Fund Index 3.49%, 3.91% YTD; Scotia Capital Canadian Hedge Fund Index -0.61%, 4.98% YTD; And the Eurekahedge April report showed hedge funds were up 3.9% YTD, and that the industry assets were now at $1.30tn.
Absolute Return – Assets for new hedge-fund launches fell "significantly" in the U.S. last year as hedge funds had their worst-ever year of performance, according to hedge-fund magazine Absolute Return.
"With these results, it’s no surprise that 2008 is being dubbed hedge funds’ worst year," deputy editor Carolyn Sargent said. "Turbulent markets, big losses, fund closures and the Madoff scandal have put investor loyalty to the test. Most investors are staying on the sideline, but those who are allocating capital can demand more favorable investment terms."
The financial crisis spurred investors to convert holdings to cash, and some funds faced unexpected disruptions to their trading strategies, including temporary bans on selling stock short.
