Global hedge fund launches plunge, liquidations rise amid turmoil

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A trader looks at a screen that charts the S&P 500 on the floor in New York

NEW YORK (Reuters) – New hedge fund launches dove in the second quarter to the lowest level since the 2008 global financial crisis, while fund liquidations spiked, industry data provider HFR said on Friday.

There were 80 hedge fund launches between April and June, down 57% from the first quarter and the lowest number of new funds since the fourth quarter of 2008, when 56 funds were launched, according to HFR

Another 156 hedge funds closed their doors between April and June, 24% more liquidations than the previous quarter. Overall, the number of hedge funds fell to 9,237 in the second quarter from 9,313.

“Risk-off sentiment drove investor risk aversion, with investors maintaining exposures to established funds through the current volatile market paradigm of unprecedented geopolitical and macroeconomic uncertainty,” said Kenneth J. Heinz, president of HFR.

The data underscores the challenges faced by the hedge fund industry in 2022 amid market turmoil, with $7.7 billion in net outflows in the first half of the year.

Still, hedge funds on average have outperformed the S&P 500. The HFRI fund-weighted composite index is down 4% this year through August, while the S&P plunged 17% in the same period.

(Reporting by Carolina Mandl in New York; Editing by Cynthia Osterman)

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