Hedge Funds Growth Slowing

The global hedge fund industry continues to grow, but at a slower pace than during the pandemic, says research from SigTech. Around 900 new funds launched in 2022 compared to a record of more than 2,000. Last year saw the smallest number of launches since 2010. It shows the industry is focused on the United States with a 65.4 per cent market share, followed by the UK (8.8 per cent), and Hong Kong (3.5 per cent). Canada’s market share is 2.3 per cent, larger than Brazil (2.2 per cent), Switzerland (two per cent), France (1.7 per cent), Singapore (1.3 per cent), and Australia (1.1 per cent). Delaware and the Cayman Islands are the preferred legal jurisdictions for hedge funds accounting for more than 60 per cent of the funds available. Canada is the preferred legal jurisdiction for one per cent of funds. It says one explanation for the slowdown could be the rise in large multi-strategy funds which account for 13 per cent of funds, behind equity long/short (27 per cent) and other equity strategies (e.g. market neutral and long-biased), and credit funds, which have around 15 per cent each. These funds are in high demand by institutional investors and have also become an attractive alternative for portfolio managers wanting to strike out on their own.