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New Hedge Fund Launches Raise $31.5 Billion in \'07

Date: Monday, February 4, 2008
Author: Absolute Return

NEW YORK, February 4, 2008 – The Absolute Return New Funds Survey for 2007, published in the February issue of Absolute Return magazine, shows that assets for new hedge fund launches in the U.S. surpassed those of 2006.  The 81 largest hedge fund launches of 2007 amassed $31.5 billion, up slightly from the $31 billion raised by 86 funds during 2006.  The total new fund assets are down more than 20% from 2004, when 81 new launches raised $40 billion.  In 2005, new fund launches ended the year at $34 billion.

Most of the launches were in the first six months of the year, with approximately 51 hedge funds raising $9.2 billion through June and $19.3 billion by year’s end.  The 30 launches from July through December initially raised $7.5 billion and finished the year with $13.8 billion.

Eight new funds raised more than $1 billion, surpassing the previous year’s six funds.  The biggest launch of the year, Paulsons Credit Opportunities II fund, opened in January with $130 million and finished the year with $3.2 billion, representing a 2,362% jump in assets. The fund, which won Absolute Return’s Fund of the Year award in December, succeeded on Paulson’s now-famous subprime short. The second largest launch of 2007 was Renaissance Institutional Futures Fund, which launched in October with $1.32 billion.  It finished the year with $3.1 billion, a 134.5% increase in assets.

The credit upheaval led to a reshuffling of the most popular investment strategies.  Multistrategy funds jumped to first place in terms of assets with 18 launches raising $3.82 billion.  Credit-focused hedge funds came in second with nine launches raising $2.3 billion.  Global equity hedge funds, including Latin American strategies, had 16 launches with $2 billion in assets - almost double the number of launches in 2006.

U.S. long/short equity, the top strategy of 2006, yielded the highest total of new fund launches in 2007 but came in fourth in assets raised.  The category’s 22 new funds raised $2.41 billion, a significant drop from $8 billion raised by 34 funds in 2006.  Fixed-income hedge funds were virtually absent last year after raising $9.8 billion 14 launches during 2006.

Last year, 26 new hedge funds finished the year with less than $100 million, as opposed to 30 in 2006, and only three new funds managed $50 million or less.  There were 23 launches that finished 2007 with $100 million to $250 million, down from 32 a year earlier.

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About Absolute Return

Absolute Return is the leading source of US hedge fund news and information, featuring proprietary data and analysts on more than 2600 US single-manager hedge funds.  Absolute Return, a monthly magazine, and the Absolute Return Directory and Database are divisions of HedgeFund Intelligence, the biggest provider of hedge fund news and data in the world with the largest and most knowledgeable editorial and research teams of any hedge fund information provider. We supply data on over 8000 funds and comprehensive news and analysis from across the globe.


Brendan F. McManus

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