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How many hedge funds go out of business in the first year?
Asked by John Hutter

Do you have any statistics regarding this?

Answer By Julie Scuderi

It is estimated that between 10-20% of new hedge funds will fail within their first year. Once a hedge fund makes it past the first year, the failure rate does drop substantially, but there is always some risk for failure.

Of course, the fund manager has a lot to do with the success or failure of a hedge fund. Managers will prior experience, or those who have an established repertoire with high net worth individuals, generally have more success when launching a hedge fund. However, experience and contacts don't mean anything if the investment strategy fails, so even the most experienced hedge fund managers aren't guaranteed to succeed. As we just recently saw, hedge funds ran by top execs at companies like Bear Stearns had to close their doors due to unforeseen events in the market.

Answer By

According to a recent in-depth survey conducted and published by Per trac, 15% of hedge funds go out of business every year.