Financial Results
Q1 Sees Spike In Hedge Fund Launches - Data
The HFR Market Microstructure Report found there was an increase in new hedge fund launches in Q1 2017
New hedge fund launches in the first financial quarter of 2017 increased for the first time since the first quarter of 2016, as both hedge funds and equity markets gained through the first part of the year, according to a report by HFR.
The HFR Market Microstructure Report also found that measures of financial market volatility fell to record lows.
Total hedge fund industry capital increased to a record $3.07 trillion in Q1 2017, surpassing the previous record of $3.02 trillion logged in the prior quarter. The total number of active hedge funds, including fund of hedge funds, declined to 9,733 in the first quarter. Hedge fund liquidations declined narrowly in Q1 2017, falling from 275 to 259 from the previous quarter.
Average fund management and incentive fees dipped, as the average management fee fell by one basis point to 1.47 per cent, and the average incentive fee fell 10 bps to 17.3 per cent.
The average management fee for funds launched in Q1 increased to 1.4 per cent, up slightly from 1.3 percent for 2016 launches. The average incentive fee for funds launched in Q1 17 fell to 17.1 per cent, down 30 bps from 2016 fund launches.
HDRI performance dispersion fell slightly in Q1, as the top decile of hedge funds gained an average increase of 14.1 per cent, while the bottom decline by 7 per cent (a dispersion of 21.1 per cent), representing a modest decline from +13.7 and 10.1 per cent, respectively in Q4 16 (23.8 per cent dispersion).
“Hedge fund launches saw an uptick to begin 2017 as total industry capital extended above the $3 trillion milestone, investor risk tolerance increased, and expectations for near-term financial market volatility declined,” stated Kenneth Heinz, president of HFR. “The recent increase in launches and moderation in liquidations is consistent with the trend of fee structures evolving to meet institutional investor demands and requirements. It is likely these trends will remain central to industry growth for the balance of the year.”