Hedge Fund Launches in 2012

by Ross Ford

  • 26 Sep 2012
  • HF

Preqin currently tracks profiles and data on over 7,500 hedge funds, including those dating back to the inception of the hedge fund industry. In this blog we examine the new fund launches of the year so far, revealing which strategies have been most commonly launched over the past 10 months. Due to ongoing economic uncertainty in global financial markets, there have been some significant changes to strategies of new funds launched in 2012 compared to previous years. Long/short strategy funds continue to have the highest proportion of fund launches, with 39% of all funds launched in 2012 using a long/short strategy. However, the proportion of long/short fund launches has steadily been declining since the financial crisis of 2008. Pre-2008, long/short strategy funds commonly represented 50% of all fund launches in a given year, with long/short strategy funds making up 54% and 53% of new fund launches in 2006 and 2007 respectively.

Global macro hedge funds account for 34% of all fund launches in 2012. This represents a large increase on a previous high in 2009, when global macro funds represented 28% of all fund launches. These two figures, which follow the onset of the global financial crisis of 2008 and the ongoing sovereign debt crisis in 2011, demonstrate the opportunities that global macro fund managers find when markets are volatile. Relative value funds represent 13% of all fund launches so far in 2012. With the majority of arbitrage strategies represented in this sector, it shows that these managers are likely seeking to take advantage of pricing anomalies arising from recent events such as the sovereign debt crisis.

Since the financial crisis in 2008, Preqin has seen a rise in the number of funds using other strategies, such as asset-backed lending strategies and mortgage-backed strategies. In 2007, the number of funds launched using one of these two strategies reached a high point, with these vehicles representing 3% of funds launched. In 2012, the figure has hit a new high of 5% of all fund launches. These findings, coupled with those above, suggest that hedge fund managers are looking for more innovative strategies, away from traditional equity focused long/short strategies, which may offer diversification and potential for non-correlated returns in troubled markets.

Continue browsing industry reports, publications, conferences, blogs and more on Preqin Insights