• Only minimal increase over the year
• Performance inconsistent
The research company HFR, which specializes in hedge funds, has identified weak development in the sector for the second quarter. The experts’ evaluation showed that fewer hedge funds were launched again in the quarter. Accordingly, the number of newly launched hedge funds collapsed to 80. This was the lowest launch rate since Q4 2008, when only 56 new funds launched.
A total of 156 funds were liquidated in the second quarter, up 30 from the previous quarter. Annually, 501 funds are estimated to have been liquidated. At the same time, the number of newly launched funds totaled 510, resulting in a minimal increase.
Increasing risk aversion in the market
As a reason for this trend, HFR cited in particular a risk aversion among investors worldwide, which shaped the first half of 2022. HFR boss Kenneth Heinz referred in particular to the uncertainty and gloomy prospects for the economy, which would have driven investors to maintain their investments in established funds instead of investing in new hedge funds.
This trend continued in the third quarter, from which macro strategy funds would have benefited: “A strong risk-off sentiment accelerated gains in uncorrelated macro strategies until mid-Q3 22,” the expert said in an official statement by HFR.
Performance inconsistent
In terms of outperformance, there has been a strong development against this background, at least in the case of the so-called macro hedge funds, which have risen sharply in September, the research company announced in a further statement. “Macro hedge funds rallied in September, helped by currency and fixed income exposures.” The experts named record gains in the US dollar, the interest rate policy of the US central bank, which wants to get inflation under control by raising interest rates, and price declines across the board in US stocks as the driving factors.
However, hedge funds with strategies such as equity hedge, event-driven and relative value have fared less well. There have been declines here.
There was therefore a diversification in hedge fund performance in September, as the experts made clear with a view to the HFRI, a fund of funds index that reflects the average monthly performance of around 2,000 hedge funds. “The top decile of HFRI constituents gained 6.4% on average, while the bottom decile fell 14.3% on average, representing a 20.7% up-and-down spread. In comparison, the Dispersion in August just 14.5% Over the first nine months of the year, the top decile of the HFRI is up an average of 38.0%, while the bottom decile is down an average of 35.3%, a dispersion of 73.3 %. Roughly a quarter of hedge funds posted positive performance in September,” HFR continued.
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