Hedge Fund Closings Outnumber Launches Again
Hedge fund startups are under pressure amid lackluster performance and investor discontent over high fees.
(Bloomberg) -- Global hedge fund liquidations exceeded launches for the third consecutive quarter as managers faced a tough capital-raising environment.
About 213 funds closed in the first three months of this year, compared with 136 that opened, according to a Hedge Fund Research Inc. report Friday. Liquidations remained steady from the prior quarter, while launches rose about 23%.
Hedge fund startups are under pressure amid lackluster performance and investor discontent over high fees. Investors pulled $17.8 billion from hedge funds in the first three months of this year, the fourth consecutive quarterly outflow. The industry has seen a string of firms shut funds or return investor capital including Highbridge Capital Management and Duane Park Capital Management.
The average management fee for funds launched in the first quarter declined 10 basis points to 1.19%, while the average incentive fee was 18.79% -- an increase from 17.9% for funds started in 2018.
Hedge funds, on average, rose 3% in the first quarter on an asset-weighted basis, according to HFR, lagging the S&P 500 Index, which gained 13.7%, with dividends reinvested, in that period.
--With assistance from Katia Porzecanski.
To contact the reporter on this story: Sammy Criscitello in Boston at scriscitello@bloomberg.net
To contact the editors responsible for this story: Alan Mirabella at amirabella@bloomberg.net, Melissa Karsh, Josh Friedman
©2019 Bloomberg L.P.