Hedge fund liquidations drop by 50 per cent in Q1

17 June 2009

Hedge fund liquidations fell by 50 per cent in Q1 2009 from the record levels set in the prior quarter, according to data released today by a leading provider of hedge fund industry data.

Chicago-based HFR Group, a global leader in the provision of hedge fund data, research, indexation and asset management said in its quarterly report that during the first quarter, 376 funds closed, compared to 778 fund closings in Q4 2008.

This represented a quarterly attrition rate of 4.05 per cent, the second highest quarterly attrition rate observed historically, exceeded only by the rate of 7.77 per cent also set in the prior quarter.

Since mid-year 2008, the total industry has declined by nearly 1,200 funds to just over 9,050 funds. Liquidations of funds of hedge funds experienced a significant increase in Q1 2009 and accounted for more than half of all closings, with nearly 200 funds-of-funds (FoF) shutting down, a single quarter record.

This represented an annual FoF attrition rate of over eight per cent, nearly double the previous record set in Q4 2008.

New fund launches accelerated during 1Q09, with approximately 150 funds entering the market, the highest rate of new introductions since Q2 2008.