Hedge fund assets up as liquidations increase

upward graph 410Hedge fund liquidations rose to a three-year high last year in what remains a tough environment for capital raising.

However, investment performance increased and assets reached a record level of $2.25 trillion (€1.74 trillion), according to the latest HFR Market Microstructure Industry from HFR, a hedge fund index provider.

There were 238 funds liquidated in the fourth quarter of last year and 873 funds for the full year - the highest since over 1,000 funds liquidated in 2009.

Liquidations were concentrated in equity hedge, with over 300 funds.

But hedge fund launches rose at the year-end 2012, bringing the yearly total to 1,108 launches, compared to 1,113 the year before.

Launches were distributed across macro, relative value and equity hedge strategies.

There was substantial improvement in the performance of the top decile of HFR’s index constituents, with an average gain of 32.6%, increasing from the record low of 19.5% from 2011.

Underperformance of the bottom decile narrowed to a loss of 16% from a loss of 30.7% the year before.

The HFRI Fund Weighted Composite Index gained 6.4% in 2012, versus a loss of 5.25% from the prior year.

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