- Advertisement -
- Advertisement -

Related

All Quiet on the Launches and Closures Front

Report: Alternative Fixed Income

- Advertisement -

Stockholm (HedgeNordic) – Tough market conditions likely present more challenges for managers to launch new hedge funds. According to HFR, new hedge fund launches in the third quarter of 2022 edged lower compared to the prior quarter, reaching the lowest level since the final quarter of 2008. The level of fund liquidations also remained historically low.

An estimated 71 hedge funds were launched in the third quarter of 2022, down from the estimated 80 launches in the second quarter. The third quarter’s number of new launches represents the lowest launch rate since the depths of the Global Financial Crisis in the final quarter of 2008, which saw only 56 new fund launches. The environment was challenging for new and recently launched funds amid a decline in overall risk tolerance, according to Kenneth J. Heinz, President of HFR.

A decline in risk tolerance led to “institutions focusing allocations on well-established funds which have successfully navigated much of the 2022 volatility,” says Heinz. “Similar risk-off sentiment has also contributed to steady but historically low levels of fund liquidations, with institutions maintaining exposures through the current economic turmoil and tension between inflation and economic weakness heading into 2023,” emphasizes Heinz.

“Similar risk-off sentiment has also contributed to steady but historically low levels of fund liquidations…”

The number of hedge fund liquidations declined quarter-over-quarter with an estimated 145 funds closing their doors in the third quarter compared to 156 fund liquidations in the second quarter. An estimated 544 funds were liquidated during the trailing 12-month period ending September 2022, with the number of new launches reaching an estimated 449 hedge funds. “With significant uncertainty and wide disparity in economic outlooks into early 2023, it is likely that both launches and liquidations remain near historic levels, as institutions carefully evaluate opportunities and deliberatively position portfolios for volatility in 2023,” concludes Heinz of HFR.

The Nordic Angle

Some managers may see difficult market conditions as an opportunity to launch a fund to take advantage of market dislocations. Copenhagen-based fixed-income specialist CABA Capital has launched a new fund to capitalize on elevated and attractive spreads between Scandinavian mortgage and government bonds (read more).

The Nordic hedge fund industry saw a similar number of launches and liquidations in 2022, as liquidations slowed down noticeably in the past two years. An estimated 11 new hedge funds were launched in the Nordic region during 2022, compared to eight in 2021 and 13 in 2020. The number of hedge fund liquidations declined in the past two years, with an estimated 12 funds shutting down during 2022, down from 16 in 2021, 32 in 2020, and 30 in 2019.

 

Photo by Piret Ilver on Unsplash

Subscribe to HedgeBrev, HedgeNordic’s weekly newsletter, and never miss the latest news!

Our newsletter is sent once a week, every Friday.

Eugeniu Guzun
Eugeniu Guzun
Eugeniu Guzun serves as a data analyst responsible for maintaining and gatekeeping the Nordic Hedge Index, and as a journalist covering the Nordic hedge fund industry for HedgeNordic. Eugeniu completed his Master’s degree at the Stockholm School of Economics in 2018. Write to Eugeniu Guzun at eugene@hedgenordic.com

Latest Articles

Bright Spots Emerge Amid Difficult March for Nordic Hedge Funds

Although March already feels like a distant memory amid the turbulence of April, Nordic hedge funds also faced a challenging month back then. All...

Mandatum Managed Futures Maintains Momentum

Mandatum Managed Futures Fund was named the “Best Nordic Managed Futures Fund” at the Nordic Hedge Award for the second year in a row,...

TIND Discovery Fund Clinches 2024 “Rookie of the Year” Title

One of the earliest distinctions a newly launched hedge fund in the Nordics can earn is the “Rookie of the Year” award, granted annually...

Evli’s Nordic High Yield Fund Aims for Balanced Pan-Nordic Exposure

Finnish asset manager Evli has long been recognized as a specialist in fixed income, managing €7 billion across the asset class. While the firm...

Announcing the Winners of the 2024 Nordic Hedge Award

HedgeNordic is delighted to announce the winners at the 2024 Nordic Hedge Award. We are honoured and humbled to bring together the Nordic hedge...

Kraft Fondene’s Three Pillars in High-Yield Investing

When allocators and investors hear about annual returns of 20 or 30 percent, their first thought is typically of strong equity market performance. Few,...

Allocator Interviews

In-Depth: Megatrends

Voices

Request for Proposal

- Advertisement -