Hedge fund launches heading for eight-year low

New hedge fund launches last year look set to be the lowest since 2008 if the rate at which new funds were launched in the first three quarters held steady to the end of 2016. Fund closures are also set be the highest in eight years.

There were 576 new launches in the first nine months, lower than 2008’s 659 launches, according to data from Hedge Fund Research. Meanwhile, 782 funds were liquidated, making it the highest level of closures since 1,471 funds were shut down in 2008.

Despite the slowdown, alumni of some of the biggest names in the hedge fund industry are midway through launching new funds: Ben Melkman, a former Brevan Howard partner who led the firm’s Argentina-focused fund, is starting a hedge fund in New York called Light Sky Macro and Marcello Sallusti, the former deputy investment chief at Egerton Capital, has launched Engadine Partners, a European equity fund that bets on stocks rising and falling.

David Russekoff, a former chief investment officer at Perry Capital, is also starting a hedge fund: Smith Cove Capital Management.

At the same time, investors are seeking more liquid alternatives to traditional hedge funds, or strategies with longer lock-ups, such as private equity and real estate.

It is driving a trend towards fewer hedge fund start-ups. Those that do launch, are led by managers with established records.

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