Hedge Fund Hell: Record Liquidations

Hedge fund liquidations surged in the fourth quarter, making 2008 the worst year for fund managers due to weak performance and massive redemptions, according to a hedge fund research firm.

Chicago-based Hedge Fund Research said that 1,471 funds, or roughly 15% of the hedge fund industry, were liquidated, almost doubling the 2005 record set with 848 liquidations. More than 775 funds closed in the final quarter of 2008, the firm said, more than doubling the previous quarterly record of 344 set in the third quarter of 2008.

"After years of steady growth, 2008 was a record year for hedge fund liquidations, reflecting in part the transitions occurring across many aspects of the overall financial industry, as well as the substantial performance dispersion between hedge funds," said Kenneth Heinz, president of Hedge Fund Research. "As the industry evolves to suit investor demand, trends in strategy preferences, service providers, disclosure and transparency are likely to shape the industry landscape for the foreseeable future." ...