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Hedge Fund Liquidations and Startups

Hedge Fund Liquidations and Startups

More Hedge Fund Start-Ups Than Liquidations

Some more encouraging news for the hedge fund industry: new hedge funds start-ups in the third quarter exceeded the number of liquidations.  New hedge funds have not outnumbered liquidations since the worst of the recession last year.  224 new hedge funds were started and 190 funds were liquidated in Q3, making the estimated total number of hedge funds 6,775.
The revival of hedge funds comes as investors appear more confident about putting their cash in the alternative asset space. Hedge fund assets exceeded the $2 trillion mark for the first time in a year this November as cash pulled from the financial markets in 2008 found its way back to alternative investments, according to HedgeFund.net, an online provider of hedge fund data and performance.

But the number of new hedge fund start-ups this year remains well below the average annual pace of 1,400 seen from 2002 to 2007. Despite the drop in liquidations for in third quarter, fund liquidations for 2009 have already made the current calendar year the second highest on record for fund closures. So far, 858 hedge funds have shut down, exceeding the 2005 total of 848 funds.

A record 1,471 hedge funds were liquidated in 2008 as a result of the financial crisis. Source

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