The launch of the new hedge fund rose at year end 2012, narrowly trailing total launches for 2011 as total hedge fund industry assets increased to a record of $2.25trn, according to0 data from the latest HFR Market Microstructure Industry Report.
New launches totalled 284 in Q4 2012, representing the second highest quarter for 2012, while the full year total of 1,108 launches was in line with the 2011 total of 1,113 launches.
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Hedge fund liquidations also rose, with 238 funds liquidating in Q4 2012 and 873 funds for the full year 2012, the highest since over 1,000 funds liquidated in 2009. Liquidations in 2012 were concentrated in equity hedge, with over 300 funds liquidating in the strategy. Launches were distributed across macro, relative value and equity hedge strategies.
Index performance dispersion narrowed slightly over 2011, but with substantial improvement in the performance of the top decile of HFRI constituents. The top decile of all HFRI constituents posted an average gain 32.6% for 2012, increasing from the record low of 19.5% from 2011.
The performance decline of the bottom decile narrowed to 16.0% from the 2011 decline of 30.7%, creating a top bottom decile dispersion of 48.6% for 2012. The HFRI Fund Weighted Composite Index gained 6.4% in 2012, versus a disappointing decline of 5.25% from the previous year.
Management and incentive fees declined industry wide, with average management fees falling by 1 bps to 1.56%, while average incentive fees fell to 18.54, a decline of 17 bps for 2012. Fee data shows a mixed trend by vintage year of launch, with funds launched in 2012 charging an average management fee of 1.62, an increase of 1 bps over the prior year; average incentive fees for 2012 launches fell from 18.08% to 17.74%.
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By GlobalDataLeading service providers increased market share over the past year, with Goldman Sachs, JP Morgan and Credit Suisse posting gains in Prime Brokerage, while GlobeOp and Citigroup gained market share for administrators.
