Record Number of Hedge Funds Liquidate in 2008
More than 775 funds liquidated in the fourth quarter,
nearly 15 percent of funds closed in 2008
New fund launches lowest since 2000
CHICAGO, (March 18, 2009) – Hedge fund industry consolidation continued through the
end of 2008, with a record number of hedge funds liquidating in the fourth quarter,
according to data released today by Hedge Fund Research, Inc. (HFR), a leading hedge
fund data provider.
Reflecting record investor withdrawals of over $150 billion in Q4, 778 funds
liquidated during the period, more than doubling the previous quarterly record of 344, set
just one quarter earlier in 3Q08. The total number of liquidations in 2008 was 1,471, an
increase of over 70 percent from the previous full year record of 848 liquidations set in
2005.
The fourth quarter also saw a sharp drop in the number of new funds launched,
with only 56 launches for the quarter versus 117 funds launches in 3Q08, although 659
funds launched over the calendar year. The launch total for the full year was the lowest
since 2000, when 328 funds launched.
2008 was a record year for performance dispersion across the hedge fund
industry, with nearly 100 percentage points separating the top decile of
performers from the bottom decile;
-Despite substantial transition across the brokerage industry, the top three prime
brokerage firms continue to control more than 62 percent of all industry capital;
-More than 275 Funds of Hedge Funds were liquidated in 2008, also a record;
-On a net basis, the total number of hedge funds declined by about eight percent in
2008, to 9,284.
“After years of steady growth, 2008 was a record year for hedge fund
liquidations, reflecting in part the transitions occurring across many aspects of the overall
financial industry, as well as the substantial performance dispersion between hedge
funds,” said Kenneth J. Heinz, president of Hedge Fund Research. “As the industry
evolves to suit investor demand, trends in strategy preferences, service providers,
disclosure and transparency are likely to shape the industry landscape for the foreseeable
future.”
About HFR
Chicago-based HFR Group L.L.C., founded in 1993, is a global leader in the provision of
hedge fund data, research, indexation and asset management. The HFR Group of
companies includes Hedge Fund Research, Inc., and HFR Asset Management L.L.C.
Hedge Fund Research produces the HFR Database, considered to be the definitive source
of hedge fund performance and information. HFR also distributes the HFRI and HFRX
Indices – the premier benchmarks for hedge fund industry performance.
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