New hedge fund launches sunk to an 18-year low during 2018, according to data from Hedge Fund Research cited by Institutional Investor. The dearth of new launches, currently at their lowest since the year 2000, coincides with the decline of fund liquidations, which last year hit their lowest point since 2007, according to HFR.
HFR’s report claimed these particular trends can be attributed to investors shying away from volatile markets and riskier assets. Despite this, liquidations haven’t risen immensely since most allocators have preferred to hold on to the hedge fund assets they already own.
The most successful funds launched in 2018 tended to be those started by established firms and ones using macro strategies.
“Toward the end of the year, when people's risk tolerance was falling, it was those large macro funds that did reasonably well into the end of the year,” HFR president Ken Heinz said.
Using HFR’s asset-weighted index, macro strategies performed the best for the year at 1.61 percent, however, they also accounted for the most liquidations in the fourth quarter.
“Of all the things that we track, the launches and liquidations are some of the trickiest,” said Heinz. “Everything influences them a little bit.”