More hedge funds launch in April-June period, after first-quarter 12-year low

FILE PHOTO: A man wearing a face mask walks in front of the New York Stock Exchange building in the financial district, during the outbreak of the coronavirus disease (COVID-19) in New York City, New York, U.S. April 23, 2020. REUTERS/Eduardo Munoz

LONDON (Reuters) - A total of 129 new hedge funds launched in the April-June quarter this year, recovering from the previous quarter’s 12-year low as investor confidence slowly recovered from the COVID-19 hit, according to industry tracker Hedge Fund Research.

The second-quarter number was the highest since the year-ago period when 153 hedge funds started trading, HFR said in a report on Wednesday.

Many hedge funds put launches on hold at the start of the year as the new coronavirus pandemic hit markets and sent investors fleeing for safe-haven assets.

Against that backdrop, just 84 hedge funds launched in the first three months of the year in the worst quarter since the financial crisis, according to the data.

“As investor risk tolerance continues to recover into the second half of the year, institutions are expecting to increase or begin implementing allocations to hedge funds as components of diversified portfolio allocation and in response to the equity and credit market volatility of early 2020,” HFR president Kenneth Heinz said.

However, the number of launches was dwarfed by the 178 hedge funds that HFR said had shut down in the second quarter, although that was down from a four-year-high of 304 in the preceding three months.

Reporting by Maiya Keidan, editing by Louise Heavens