Key Takeaways
- • Hedge Fund Research (HFR) reported a record 778 hedge fund liquidations in Q4 2008, while the same quarter saw record investor withdrawals of over $150 billion.
- • Total 2008 liquidations reached 1,471, up more than 70% from the previous annual record of 848 set in 2005.
- • Launches fell sharply to 56 in Q4 2008 from 117 in Q3, and 659 funds launched across 2008, the lowest annual total since 2000 (328 launches that year).
- • The net number of hedge funds declined about 8% to 9,284 in 2008, and performance dispersion hit a record, with nearly 100 percentage points separating top and bottom decile performers.
Summary
A record number of hedge funds liquidated in the fourth quarter of 2008 as industry consolidation accelerated, according to data from Chicago-based Hedge Fund Research (HFR). The firm reports that 778 funds liquidated in the final quarter of 2008, a period that also saw record investor withdrawals of more than $150 billion.
For the full year, 1,471 hedge funds liquidated, an increase of more than 70% over the previous annual record of 848 liquidations set in 2005. The downturn also curbed new formation. Only 56 funds launched in the fourth quarter, down from 117 in the third. Across 2008, 659 funds launched, HFR's lowest annual total since 2000, when 328 funds launched. On a net basis, the number of hedge funds fell roughly 8% to 9,284 by year-end.
HFR also identified 2008 as a record year for performance dispersion, with nearly 100 percentage points separating the top decile of performers from the bottom decile. Kenneth Heinz, president of Hedge Fund Research, said that trends in strategy preferences, service providers, disclosure and transparency are likely to shape the industry landscape for the foreseeable future as the industry adapts to investor demand. The article notes that consolidation is expected to continue as the industry recovers from the losses of 2008.
For the full year, 1,471 hedge funds liquidated, an increase of more than 70% over the previous annual record of 848 liquidations set in 2005. The downturn also curbed new formation. Only 56 funds launched in the fourth quarter, down from 117 in the third. Across 2008, 659 funds launched, HFR's lowest annual total since 2000, when 328 funds launched. On a net basis, the number of hedge funds fell roughly 8% to 9,284 by year-end.
HFR also identified 2008 as a record year for performance dispersion, with nearly 100 percentage points separating the top decile of performers from the bottom decile. Kenneth Heinz, president of Hedge Fund Research, said that trends in strategy preferences, service providers, disclosure and transparency are likely to shape the industry landscape for the foreseeable future as the industry adapts to investor demand. The article notes that consolidation is expected to continue as the industry recovers from the losses of 2008.
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