Hedge fund launches rose through early 2014 as new launches in Equity Hedge and Event Driven contin ued to attract new investors, and total hedge fund capital rose globally to a record $2.7 t rillion at the end of the first quarter.
New hedge fund launches totaled 289 in 1Q14, up from 244 in the prior quarter , and the highest total since 297 funds launch ed in 1Q13, as reported in the latest HFR ® Market Microstructure Industry Report , released today by HFR, the established global leader in the indexation, analysis and research o f the global hedge fund industry. Hedge fund liquidations totaled 272 for 1Q14, a decline from the 296 closures in the prior quarter but still the second highest quarterly liquidation total since 2Q09.
Go deeper with GlobalData
New fund launches were spread across all strategies, with the highest number of new funds in Equity Hedge and the greatest quarter – o ver – quarter growth in Event Driven strategies, with both driven by investor interest in the powerful wave of investor interest in Fundamental Value, Special Situations and Shareholder Activist strategies. Equity Hedge launches totaled 116 in 1Q14, which al so experienced the hig hest number of launches in 2013, with both representing approximately 40 percent of all launch activity. Event Driven launches increased to 56 for 1Q14, nearly 20 percent of all launches ; in 2013, ED accounted for only 7 percent of ne w launches. Since 2007 , the number of funds dedicated to Shareholder Activis m has increased from 52 to 71 , with these collectively managing over $100 b illion in investor capital. Regionally, European located hedge fund launches declined as a percentage of the overall total with 121 in 1Q14, representing 42 percent of all hedge fund launches. In 2013, 581 European located funds were launched, nearly 55 percent of the 1,060 launches in the calendar year.
Performance dispersion narrowed across the industry in 1Q14, with the top decile of hedge funds, as gauged by the HFRI Fund Weighted Composite Index ® , seeing lower returns , while the bottom decile was essentially unchanged from the prior quarter. The top decile of HFRI constituents gained +33.4 percent in the trailing 12 months ending 1Q14, a decline from the +41.6 percent top decile gain in 2013. The bottom decile of HFRI constituents declined – 18.3 percent over the same 12 – month period , a slight improvement fr om the – 18.9 percent bottom decile performance for FY13. As a result , the dispersion between top and bottom HFRI deciles narrowed from over 60 percent in 2013 to 51.7 percent in the trailing 12 months ending 1Q14 . The HFRI Fund Weighted Composite Index wa s up +1.07 percent in 1Q14, following a gain of +9.13 percent in 2013.
Average management fees across the entire hedge fund industry declined 2 basis points in 1Q14 from the prior quarter to 1.52 percent, while average incentive fees fell 28 basis points to 17.99 percent. Average management fees charged by the vintage of funds launched in 1Q14 rose to 1.57 percent, from 1.52 in the prior quarter and 1.42 for all 2013 launches; the average incentive fee charged by funds launched in 1Q14 was 16.33, a decline of 23 basis points over the prior quarter.
"Hedge fund launch data, led by growth in event driven funds, demonstrates the underlying strength of the hedge fund industry as invested capital hit record levels in early 2014," stated Kenneth J. Heinz, President of HFR. " Unlike the beta – driven gains of 2013, investors are increasingly attracted to funds offering tactical exposure to complex and uncertain geopolitical or macroeconomic situations, inflation protection and exposure to dynamic Event Driven, M&A and Activist exposures. These powerful trends are likely to continue through mid – year, attracting new investors with competitive fees, favorable liquidity profiles in response to investor demands and strong, uncorrelated performance."
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData
