Hedge fund tough times in perspective
A recent Financial News article notes the spate of closures that have rippled through the industry.
"At least six hedge-fund firms announced plans to close in November and two more joined the list this week, underscoring the shakeout hitting the industry from uncertain markets, tighter regulation and what some fund managers say are investors with ever-shorter time horizons. Some funds were hit by large requests from investors for cash, but others were just struggling to make money, fund managers and industry consultants say."
Eight or 10 closures do not make for a definitive trend, but it does appear that we're running ahead of last year's pace.
"Globally, 424 funds were liquidated in the first six months of 2012, 14% more than in the same period in 2011, according to data provider Hedge Fund Research. It hasn't yet published figures for the third quarter, but if the six-month pace holds, it would top the number of closures in both 2010 and 2011."
This isn't great news. The real story, however, may be a much more striking lack of hedge fund launches. The number of launches rose steadily from about 650 in 2008 to more than 1,000 (roughly) in 2011. So far this year, we're running about even with last year's pace; 549 were launched in the first half of the year. That number may have plunged in the second half. We'll wait and see.
The barriers to entry seem to be as high as ever. As of now, the prognosis for 2013 remains subdued.
- here's the article