New Hedge Fund Launches Set to Hit 24-12 months Low, Preqin Says

By Nell Mackenzie

LONDON (Reuters) – New hedge fund launches will “seemingly” finish the 12 months at a 24-year low amid difficult fundraising, hedge fund analysis agency Preqin mentioned on Wednesday. the idea of the figures for the primary three quarters of this 12 months.

Within the third quarter of 2024, hedge fund managers opened 123 new funds, the bottom quantity since no less than 2000, when complete launches reached 191, Preqin mentioned. Hedge fund debuts peaked at 697 in 2017, in response to its knowledge.

Most of this 12 months’s new funds are geared toward buying and selling shares, the analysis agency mentioned.

The low degree of launches globally is because of stricter fundraising necessities in the US and Europe and stricter inside rules in China, Preqin mentioned.

Survey knowledge collected by Preqin for a report in November confirmed that 40% of managers mentioned fundraising had been tougher in 2024 than in 2023. 40% mentioned nothing had modified since 2023 however that fundraising was additionally tough at the moment, Preqin mentioned.

The variety of new area of interest funds, akin to these buying and selling insurance-related securities and cryptocurrencies, has greater than doubled previously 5 years, from 730 in 2019 to 1,570 in 2024, it mentioned. Preqin.

Multi-strategy fund launches grew at an annual fee of 4% since 2017 by way of the top of the third quarter in 2024, Preqin mentioned.

Fund closures within the first 9 months of 2024 additionally fell to their lowest degree in a decade, Preqin mentioned.

The hedge fund trade has typically grown primarily based on one among its most intently watched metrics: belongings underneath administration or (AUM).

Nevertheless, this quantity consists of leverage, investor cash in addition to any buying and selling positions which have elevated in worth.

Hedge fund efficiency has been the primary driver of development in belongings underneath administration to date in 2024, the Preqin report mentioned.

Web money distributions from hedge funds returning traders their cash totaled $8.4 billion within the 12 months ended on the finish of September. Nevertheless, within the third quarter of 2024, hedge funds obtained a web $25.5 billion in new capital, in response to the report.

The trade as an entire averaged a ten% return on funding by way of the top of September, Preqin mentioned.

(Reporting by Nell Mackenzie; enhancing by Amanda Cooper and Dhara Ranasinghe, enhancing by Louise Heavens)