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Hedge Fund Launches Decline 26% to $23 Billion in 2008


Date: Thursday, February 5, 2009
Author: Absolute Return

The Absolute Return New Funds Survey for 2008, published in the February issue of Absolute Return magazine, shows that assets for new hedge fund launches declined significantly in the U.S. as hedge funds came off the worst-ever year of performance.

 The largest new fund launches in the U.S. in 2008 amassed a combined $23.17 billion under management. That is in contrast to the $31.5 billion for the largest new funds in 2007 and $31 billion in 2006.  

 Only 35 new funds launched with more than $50 million in the first half of last year, totaling a combined $19.5 billion. Of that amount, however, $8.1 billion came from two new funds introduced by Goldman Sachs.  The remaining $11.4 billion accumulated through June 2008 was well below the $14 billion held by the 72 funds that formed during the first half of 2007. The number of new vehicles was also down in 2008, with only 55 funds managing launches that amassed $50 million by year end, compared with 81 such funds in 2007.

Six funds raised more than $1 billion, compared with eight in 2007.  The group included Appaloosa Management’s Thoroughbred fund with $1.9 billion, Lone Pine Capital’s Lone Dragon emerging markets fund with $1.8 billion and Highliner Investment Group’s $1 billion market-neutral equity Alyeska fund. 

“With these results, it’s no surprise that 2008 is being dubbed hedge funds’ worst year.  Turbulent markets, big losses, fund closures and the Madoff scandal have put investor loyalty to the test.  Most investors are staying on the sideline, but those who are allocating capital can demand more favorable investment terms,” said Carolyn Sargent, deputy editor of Absolute Return.

“In terms of new fundraising,  macro strategies and commodity trading advisers (CTA) are now popular as they both did well last year and have proved again to be non-correlated to broader markets and other hedge fund strategies,” said Sargent.

About Absolute Return

Absolute Return is the leading source of U.S. hedge fund news and information, featuring proprietary data and analysis on more than 2,500 U.S. single-manager hedge funds. Absolute Return, a monthly magazine, and the Absolute Return Directory and Database are divisions of HedgeFund Intelligence, a global provider of hedge fund news and data. For more information, please visit www.hedgefundintelligence.com/ar/.