Hedge fund liquidations rose in Q3, 2015

Hedge fund launches and liquidations both rose in the third quarter of 2015, following declines in energy commodities and equities, as well as widening spreads in high yield credit.

Hedge Fund Review (HFR) said there were 257 hedge fund liquidations, compared to 200 in the second quarter, making 674 liquidations in the first nine months of 2015, against 661 liquidations over the same period in 2014. However, HFR said that hedge fund launches in the third quarter of 2015 was 269, with 150 equity hedge strategies leading the launches. But overall, hedge fund launches in 2015, 785 in the first three quarters, compared to 814 launches over the equivalent period in 2014.

Looking at performance, HFR found that dispersion increased in the third quarter, with top decile performers posting an average gain of 9.3%, while the bottom decile fell by – 21.5%. Over the 12 months to the end of September 2015, the dispersion between the top and bottom deciles was 52.4%, up from 46.9% in 2014. HFR found little change in hedge fund fees, with average management fees of 1.51% and average performance fees of 17.76% for the third quarter. Looking ahead at hedge fund performance, HFR president Kenneth Heinz commented that while the overall index of hedge fund returns showed 2015 had been a difficult year, some funds have done well.