Absolute Return Magazine Report Shows That Fund Launches Decline 26 Percent To $23 Billion In 2008

Absolute Return Magazine Report Shows That Fund Launches Decline 26 Percent To $23 Billion In 2008

The Absolute Return New Funds Survey for 2008, published in the February issue of Absolute Return magazine, shows that assets for new hedge fund launches declined significantly in the U.S. as hedge funds came off the worst ever year of

The Absolute Return New Funds Survey for 2008, published in the February issue of Absolute Return magazine, shows that assets for new hedge fund launches declined significantly in the U.S. as hedge funds came off the worst-ever year of performance.

The largest new fund launches in the U.S. in 2008 amassed a combined $23.17 billion under management. That is in contrast to the $31.5 billion for the largest new funds in 2007 and $31 billion in 2006.

Only 35 new funds launched with over $50 million in the first half of last year, totaling a combined $19.5 billion. Of that amount, however, $8.1 billion came from two new funds introduced by Goldman Sachs. The remaining $11.4 billion accumulated through June 2008 was well below the $14 billion held by the 72 funds that formed during the first half of 2007. The number of new vehicles was also down in 2008, with only 55 funds managing launches that amassed $50 million by year end, compared with 81 such funds in 2007.

Six funds raised more than $1 billion, compared with eight in 2007. The group included Appaloosa Managements Thoroughbred fund with $1.9 billion, Lone Pine Capitals Lone Dragon emerging markets fund with $1.8 billion and Highliner Investment Groups $1 billion market-neutral equity Alyeska fund.

With these results, its no surprise that 2008 is being dubbed hedge funds worst year, says Carolyn Sargent, deputy editor of Absolute Return. Turbulent markets, big losses, fund closures and the Madoff scandal have put investor loyalty to the test. Most investors are staying on the sideline, but those who are allocating capital can demand more favorable investment terms.

In terms of new fundraising, macro strategies and commodity trading advisers (CTA) are now popular as they both did well last year and have proved again to be non-correlated to broader markets and other hedge fund strategies.

Allied Irish Bank Shortlisted In The FST Awards