A record number of hedge funds are being liquidated and the rate of start-ups has slowed dramatically, according to new research.
The quarterly performance data from Chicago-based Hedge Fund Research will stir fresh concern about an industry that some fear has become overcrowded after a run of meteoric growth.
Since2005, 1071 funds have been liquidated, while the launches of new funds through the first half of this year is less than 50 per cent of the level in the same period last year.
"For new funds to get off the ground, it is harder now than it has ever been," said Peter Astleford, a lawyer at Dechert who works in fund formation. "Seven or eight years ago, I might have spent 80 per cent of my time on start-ups - now it's 10 per cent."
As the industry matures, institutions are keener to put their money with established firms. That has made it harder for newcomers to attract capital, Astleford said.
The industry has also been rocked recently by risky bets going wrong.
Both Vega Asset Management and Amaranth Advisors have seen the value of their funds plummet as a result.
