Hedge-Fund Startups Dwindle as Managers Battle Pressure on Fees
- Number of new launches heads for lowest annual tally: Preqin
- Investor appetite cools as big money seeks returns elsewhere
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The near-$5 trillion hedge fund industry is having one of the toughest years in decades in convincing fee-conscious investors to fork out cash for new market players.
Despite a spirited pickup in inflows over the third quarter, the challenge is evident in the dwindling number of freshly launched funds and a drop in performance fees. According to the latest report by data provider Preqin, a total of 123 firms opened up shop this year through September — poised for the smallest annual tally of new entrants since at least 2000. Meanwhile even as management fees across the industry ticked up, performance compensation over the period slumped by the most since 2010.