BOSTON (Reuters) - The number of hedge funds closing their doors this year is slowing as investors add new money and performance improves.
In the first six months of 2017, 481 hedge funds shut down compared with 530 funds shuttered during the first half of 2016, according to new data from Hedge Fund Research (HFR) released on Monday.
This spells good news for the $3.1 trillion hedge fund industry after 1,057 funds went out of business last year, marking the biggest number of liquidations since the financial crisis. The industry currently counts about 8,200 hedge funds in all.
Hedge fund investors have complained loudly about hefty fees and poor returns over the last several years and pulled out $70.1 billion in assets last year.
But this year, investors are coming back, albeit slowly, having added $1.2 billion in new money since January, HFR data showed. Performance has also improved, with the average fund returning 5.4 percent in the first half, almost the exact figure for all of 2016.
During the second quarter, 222 funds shut down compared with 259 in the first quarter of 2017.
Notable funds that have gone out of business this year include Eric Mindich’s Eton Park Capital Management. More recently, John Burbank’s Passport Capital announced plans to shut its long-short equity fund.
John Paulson said his Paulson & Co was shutting its long-short equity fund. And now Brian Taylor’s Pine River Capital Management plans to close its multi-strategy master fund, roughly one year after having closed its fixed income fund.
While the number of hedge fund closures is down, it remains much larger than the number of new launches, underscoring the difficulty in raising money from investors.
In the first half of 2017, 369 new funds opened, compared with 729 in all of 2016 and a record 2,073 funds launched in 2005.
Funds launching this year include Brandon Haley’s Holocene Advisors and Ben Melkman’s Light Sky Macro. Also Michael Gelband, the bond chief at Millennium Management, has registered a name for a fund he may launch.
Editing by Jeffrey Benkoe
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