ADVERTISEMENT

Hedge Funds to Record More Closures Than Launches for Fifth Straight Year

Hedge Funds to Record More Closures Than Launches for Fifth Straight Year

(Bloomberg) -- The pain kept coming for hedge funds in 2019: if they weren’t being killed off, they were bleeding cash or wringing out dismal returns.

The industry is now on track to record more closures than launches for a fifth straight year, a blow to a market that once minted millionaires at a heady pace. More than 4,000 funds have been liquidated in the past five years, according to data compiled by Hedge Fund Research Inc.

Hedge Funds to Record More Closures Than Launches for Fifth Straight Year

Billionaires Louis Bacon and Jeffrey Vinik were among veterans who rocked the more than $3 trillion industry this year by handing back capital to clients. Many found themselves out of step with the longest running bull market in history, while others faced investor revolt or couldn’t raise enough to stay in the game. Some had just been doing it for too long, and wanted out.

Hedge Funds to Record More Closures Than Launches for Fifth Straight Year

“Everything has to come to an end, sometime,” Stephen Roberts wrote in a letter to clients this month to announce his decision to close the Horseman European Select fund. “I have found myself looking at a different path ahead.”

Hedge Funds to Record More Closures Than Launches for Fifth Straight Year

Investors are pulling money at an accelerated pace as high fees and mediocre returns send them searching for yield elsewhere. They’ve yanked $81.5 billion this year through November, more than twice the amount for the whole of 2018, according to eVestment data.

As for returns, there’s little to cheer there. While the S&P 500 delivered a 28% gain this year through November, the Bloomberg Equity Hedge Fund Index only managed 10%.

The following hedge funds closed or turned into family offices this year:

Firm/Fund/UnitPortfolio Manager/Founder
AmplitudeKarsten Schroeder
ArgentiereDeepak Gulati
ArrowgrassNick Niell
Atreaus Master FundTodd Edgar
BlueMountain flagship & quant fundsAndrew Feldstein, Stephen Siderow, Perry Vais
Cambridge SquareMarco Barrozo
Citadel’s Aptigon unitEric Felder
CJW Capital*Chris Wheeler
Duane ParkAndrew Goodwin, Dominick Maggio and David DePaolo
Eikoh ResearchJames Pulsford
EverettKelly Hampaul
HBK Capital’s Quant Fund
Horseman European SelectStephen Roberts
Lone Pine’s JuniperStephen Mandel
Macrosynergy Trading FundNikos Makris
MargateSamantha Greenberg
Moore Capital**Louis Bacon
NektarPatrik Olsson
Oceanwood European FinancialJulian Garcia Woods
Peace BridgeChristopher Buonafede and Michael Pinelli
Port MeadowCarl Vine
PrecocityNick Tiller
Protege Partners & Mov37 ^Jeffrey Tarrant
Rubicon Global FundPaul Brewer
SandellThomas Sandell
Sator SquareManuel Blanco
Stream Asset ManagementPaul Andiorio
Stone MillinerJens-Peter Stein, Kornelius Klobucar
Teza Master FundMikhail Malyshev
Three StonesJong Beum Kim
Trias L/SKilian Kentrup
Vinik Asset ManagementJeffrey Vinik
* Shelved plans to start ** Returning money in its three main funds ^ Closed two funds and returned capital following the death of founder Tarrant

--With assistance from Suzy Waite, Katherine Burton, Katia Porzecanski, Hema Parmar, Saijel Kishan, Melissa Karsh, Bei Hu and David Ramli.

To contact the reporter on this story: Nishant Kumar in London at nkumar173@bloomberg.net

To contact the editors responsible for this story: Shelley Robinson at ssmith118@bloomberg.net, Chris Bourke, Patrick Henry

©2019 Bloomberg L.P.