NEW YORK (HedgeWorld.com)–Alternative investment strategies remain popular among bullet-dodging investors, but the number of hedge fund launches to meet this demand continues to fall, according to Freeman & Co.’s latest research report.
The number of new hedge fund offerings in the third quarter dropped significantly, totaling 21 new hedge funds and hedge funds of funds, which is less than half the number of startups recorded by Freeman over the same period last year. Even last quarter, startup statistics remained brisk at 35 new funds, but was still a drop of 20% in individual hedge fund launches and a 50% drop in hedge fund of funds.
The number of new funds of funds totaled 12, while nine new single-strategy hedge funds got their start in the third quarter. Freeman officials speculate that the eagerness to enter the business has fallen due to lower returns in 2002. As the word gets out that hedge fund indexes such as the CSFT/Tremont* Hedge Fund index have outperformed equities and moderately beat fixed income since January 1999 through the third quarter of 2002, investors may take more notice of the asset class.