Emerging hedge fund managers led sector performance in the year ending with the second quarter of 2014, but continued to face challenges in raising capital, according to reports from HFR, a provider of hedge fund research, indexation and analysis.
Emerging managers with a track record of less than two years posted an average gain of 11.3% in the trailing 12 months ended June 30, compared with a gain of 9.1% for the HFRI Fund Weighted Composite.
“Emerging hedge fund managers continue to drive not only industry performance gains, but also strategic innovation across the hedge fund industry, with new funds launching to identify and monetise opportunities created by the shifting financial industry landscape, investor preferences and risk thresholds,” HFR president Kenneth Heinz said in a statement.
The top decile of HFRI constituents reported an average gain of +34.4% in the trailing 12 months through June 30, the second highest gain since 2010, behind only the 2013 return of 41.6%.
The bottom decile of HFRI performance posted an average decline of 12.7%, improving on the 18.9% loss for the 2013.
The report, released Wednesday, said the HFRI Diversity Index, comprising hedge funds owned by ethnic minorities and women, was up 11.1% over the same period.
Launches and Fees
A total of 285 new hedge funds rolled out in the second quarter of 2014, on par with both 289 from the first quarter and 288 from the second quarter of 2013.
Some 1,050 funds launched during the trailing 12 months to June 30, slightly below calendar year totals from the past three years, HFR said in the statement.
Hedge fund liquidations fell to 189 in the second quarter from 272 in the previous quarter, and totaled 979 funds for the trailing 12 months, the highest number of liquidations since 2009, following the financial crisis.
Hedge funds charged an average management fee of 1.52% in the second quarter, unchanged from the first quarter, and down two basis points from the 2013 second quarter, according to the report.