Funds specializing in shareholder activism now number 71, with $100 bn under management
Hedge fund launches rose in the first quarter of 2014 as investors sought vehicles offering them exposure to shareholder activism as well as geopolitical events and M&A activity, according to industry analysis firm Hedge Fund Research (HFR).
The number of funds launched also exceeded the number closed by 17 in the first quarter of the year, marking a turnaround from the fourth quarter of last year, when 52 more funds were closed than were launched. Hedge fund launches rose to 289 in the first quarter of 2014 from 244 in the previous quarter, HFR says. At the same time, the number of liquidations dropped to 272 from 296.
Funds specializing in equities represent 40 percent of all new launches in the first quarter, making them the most common type of new hedge fund, HFR says. Launches of event-driven funds, including funds that offer exposure to activist investing, takeovers, buybacks and other corporate events, account for 20 percent of all new launches in the quarter.
The number of existing funds dedicated to shareholder activism has risen to 71 from 52 in 2007; these now collectively manage more than $100 bn in investor capital, HFR says. Meanwhile, the proportion of hedge funds launched in Europe dropped to 42 percent of the total in the first quarter, from 55 percent of all new launches for the whole of 2013.
‘Investors are increasingly attracted to funds offering tactical exposure to complex and uncertain geopolitical or macroeconomic situations, inflation protection and exposure to dynamic, event-driven, M&A and activist areas,’ says Ken Heinz, president of HFR, in a press release. ‘These powerful trends are likely to continue through mid-year, attracting new investors with competitive fees, favorable liquidity profiles in response to investor demands and strong, uncorrelated performance.’
HFR says hedge funds’ average management fees declined 2 basis points in the first quarter to 1.52 percent. At the same time, average management fees of newly launched funds rose to 1.57 percent, compared with 1.52 percent in the previous quarter and 1.42 percent for all of 2013.
