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  • MultimanagerPM

Hedge Fund Debuts Finally Top Closures in 2Q 2023 as per Bloomberg

Updated: Dec 10, 2023

Bloomberg reported that the number of new hedge funds launching in 2Q 2023 overtook the number of closures for the first time since early 2022. This comes after a tough 2022 where many high profile funds shut down or lost huge sums of capital (e.g. Melvin Capital, Tiger Global).


Bloomberg chart of hedge fund launches and closures

In 2Q 2023, there were 133 fund debuts as per Hedge Fund Research (HFR). Strategies contributing the most to this surge include fixed-income-based relative value arbitrage, including funds specializing in volatility and inflation-linked strategies. The rise of inflation over the two years and continued uncertainty around secular, entrenched inflation as well as higher-for-longer interested rates has led may multistrategy hedge funds to invest in teams that seek to exploit these trends. Some of the best performing strategies at multimanagers have been these macro and systemic trading strategies.

 

BuysideInsider's Take

In addition to providing positive absolute returns, these inflation-linked and interest rate strategies help funds hedge against weaker performance in their other businesses, including L/S equity. In response to strong performance in these strategies and continued positive in returns in choppy in markets, many multimanager funds have been raising fees on their clients. Macro hedge fund Caxton raised its management and performance fees last year (Financial Times).


With the interest rates and inflation likely to continue to drive volatility, I expect multistrat funds to continue to invest in these macro strategies as L/S equity strategies tend to underperform. If you are a candidate interested in macro or quant funds, there should be a lot of great employment opportunities at the multimanagers and new launches.


If you have any thoughts or opinions, let us know your thoughts in the comments section.

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