* Hedge fund launches surge in Q1
* Liquidations also on the rise
BOSTON, June 16 (Reuters) - Opening a hedge fund is easier now than it has been in years, but keeping it open is a lot tougher, data released on Thursday show.
During the first quarter, 298 new hedge funds opened their doors for business, the largest number of launches since before the financial crisis, performance and asset tracker Hedge Fund Research reported.
In the first quarter of 2010, 254 new hedge funds opened for business, while 220 opened during the 2010 fourth quarter.
During the January-March period, 181 hedge funds went out of business, the highest level of liquidations since the first quarter of 2010, HFR said. In the same quarter a year earlier, 240 funds shut down, while 158 closed during the fourth quarter of 2010.
The flood of launches early this year was not entirely unexpected. Many top traders were forced to strike out on their own in the wake of new financial industry regulations that limited investment banks' trading operations.
For example, former Goldman Sachs trader Morgan Sze launched Azentus Capital this year.
Some executives who previously worked at established firms have also been setting up their own shops, including Patrick Quinn, formerly of Perry Capital, and Michael Pascutti, formerly of PIMCO and Citadel.
But as the competition for capital intensifies, it becomes more difficult to reach the $500 million to $1 billion in assets thought necessary to make a successful go at running a fund, investors and analysts said.
Unlike two decades ago, when the industry had only about 820 hedge funds, compared with roughly 9,400 now, pension funds and endowments have replaced wealthy investors as the industry's most powerful clients. And their taste for bigger funds featuring better reporting and easier access to capital is making it tougher for smaller players to stay in business.
HFR reported that incentive fees at hedge funds, long hovering around 20 percent of profits, have fallen six consecutive quarters, to roughly 18.85 now.
Management fees have stayed relatively constant at 1.58 percent. (Reporting by Svea Herbst-Bayliss; editing by John Wallace)