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Hedge fund liquidations rise as energy, high yield pressures mount

December 2015

December 20, 2015 |10:45 | Dubai

Hedge fund launches and liquidations both increased in Q3, 2015, as energy commodities and equities posted sharp declines, and high yield credit spreads began to widen. Hedge fund liquidations totalled 257 in Q3, up from 200 in the second quarter, and the highest quarterly total since Q1 2014, according to the latest HFR Market Microstructure Report, released by HFR, the indexation, analysis and research provider of the global hedge fund industry. Total liquidations in the first three quarters of 2015 stand at 674, up from 661 liquidations during the first three quarters of 2014.

The number of hedge fund launches also rose in Q3 2015 despite the market turmoil, with 269 new funds launching, an increase over the 252 launches in Q2 2015, though the YTD launch total of 785 in the first three quarters of 2015 represents a YOY decline from the 814 launches in the first three quarters of 2014. Launches were led by Equity Hedge (EH) strategies with 150 launches, although EH also led liquidations with 113 funds shutting down in the quarter.

“Hedge fund liquidations rose in 3Q15 as investor risk tolerance fell sharply, and energy commodities and equities posted sharp declines, resulting in net capital outflows, wider performance dispersion and meaningful differentiation between hedge funds,” stated Kenneth J. Heinz, President of HFR.

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