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Hedge fund launches rebound from near-record low

hedge_fundsHedge fund launches increased in the second quarter, recovering from their near-historic lows seen at the start of the year as the coronavirus crisis kicked in.

Nearly 130 hedge funds were launched between April and the end of June, according to data from Hedge Fund Research (HFR) – up from around 80 in the first quarter.

However, despite the increase in launches, the total number of estimated launches in the trailing four quarters remains historically low as a result of Q1 volatility, with 404 funds launching over the past year, HFR said.

The report also highlights that fund liquidations declined from the previous quarter in Q2, which had seen the highest liquidation total in over four years. 

An estimated 178 funds liquidated in the second quarter, a sharp decline from 304 liquidations between January and the end of March. Also driven by “virus volatility”, fund liquidations remain historically high with an estimated 821 liquidations the trailing four quarters, according to HFR.

HFR president Kenneth J Heinz said: “New fund launches rose through mid-year from historic lows in 1Q as hedge funds posted strong performance through mid-year despite the coronavirus pandemic as well as ongoing social unrest in US and the uncertainty of the upcoming US election.”

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