Following a historically quiet year for hedge fund closures, both fund launches and liquidations accelerated in the first quarter of 2026. While new launches continued their upward trend, liquidations rebounded from near-record lows to their highest quarterly level in two years, according to the latest Hedge Fund Research (HFR) Market Microstructure Report.
HFR estimates that 166 new hedge funds were launched during the first quarter, up from 136 in the previous quarter and 121 in the first quarter of 2025. The increase builds on a strong 2025, when an estimated 561 new funds came to market, the highest annual launch total since 2021.
At the same time, hedge fund liquidations climbed to an estimated 129 in the first quarter, up from just 84 in the final quarter of 2025. Although closures increased noticeably, they followed an exceptionally subdued year. An estimated 287 hedge funds shut down during 2025, compared with 406 in 2024, marking the lowest annual liquidation count since 2004.
The continued pace of new launches and relatively modest level of closures contributed to further expansion of the industry, with total hedge fund assets reaching a new record of an estimated $5.22 trillion at the end of the first quarter.
“Increasing hedge fund launches through early 2026 clearly indicated strong institutional and retail demand in the face of accelerating geopolitical risk, as well as increased opportunities associated with AI, technology and participation in the ongoing record IPO cycle.”
Kenneth J. Heinz, President of HFR.
“Increasing hedge fund launches through early 2026 clearly indicated strong institutional and retail demand in the face of accelerating geopolitical risk, as well as increased opportunities associated with AI, technology and participation in the ongoing record IPO cycle,” says Kenneth J. Heinz, President of HFR. “Despite broad equity gains through early 2026, these were generally concentrated in AI and technology sectors, indicating both increased risk and opportunity for managers and investors in the second half of 2026,” he continues. “Through the current market paradigm of rapidly shifting risk sentiment, volatility, uncertainty and specialized opportunities are likely to evolve quickly as a function of dislocations created by AI, IPO activity and the uncertainty of the Iran military conflict.”
Equity hedge fund strategies continued to dominate new fund launches in the first quarter, accounting for an estimated 80 of the 166 new funds formed, following 227 launches during all of 2025. Macro strategies ranked second with an estimated 52 new fund launches. The same two strategy groups also recorded the highest number of liquidations. HFR estimates that 64 equity hedge funds and 25 macro funds closed during the first quarter of 2026, accounting for the largest share of industry liquidations.
