US hedge funds 'raised less' in 2006

8 February 2007

2006 saw a drop in the number of new hedge funds being launched in the US, which the amount of money being raised also down, recent research has shown.

According to the New Funds Survey for 2006, published by Absolute Return magazine, the 86 largest fund launches last year only raised $31 billion, compared with the $34 billion raised in 2005, and $40 billion in 2004.

During the year, six funds managed to raise more than $1 billion, with Convexity Capital to largest with $6.3 billion worth of investment raised in February.

Although large launches are still possible, Absolute Return pointed out that they were increasingly becoming the realm of big-name banks and other financial institutions, rather than of young upstarts with little experience.

The slowing of the hedge fund industry can also be put down to some loss of confidence as the result of high-profile hedge fund collapses, including the failure of Amaranth Advisors in September, which lost investors more than $6 billion.

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