Europe Hedge Funds Shrink and Shutter as Turmoil Hurts Returnsby
Europe’s hedge-fund industry contracted for a sixth straight quarter as the U.K.’s decision to leave the European Union and concerns that China’s growth is slowing caused losses and forced some money managers to shutter.
Sixty-two hedge funds were shut in the three months through June compared with 54 that started, according to data compiled by Singapore-based Eurekahedge. A total of 484 hedge funds have closed since the start of 2015, compared with 415 starts, shrinking the industry to fewer than 4,000 funds, the data shows.
Hedge funds have struggled to navigate markets roiled by wide stock swings, a commodity selloff and divergent monetary policies this year, suffering billions of dollars in capital outflows. The Eurekahedge European Hedge Fund Index lost almost 3 percent this year through June, its worst first half since the measure was first compiled in 1999, increasing redemption pressure on regional hedge funds.
Investors pulled $4.4 billion out of European hedge funds over the last two months, Eurekahedge said. The industry managed $538 billion at the end of June.
"Performance has been lackluster over the past couple of years," Mohammad Hassan, head of hedge-fund analysis at Eurekahedge, said. "A number of funds are barely above their high-water marks, which makes it difficult to earn fees and sustain the business for small managers in particular."
High-water marks, used by many hedge-fund firms, prevent managers from collecting performance fees until they make up previous losses.