Pace of hedge fund closures slows
In the first quarter, 376 funds liquidated assets, down from a record 778, as investors withdrew $103 billion.
NEW YORK (Reuters) -- The pace of hedge fund closures slowed in the first quarter while start-ups increased, Hedge Fund Research said on Tuesday, signs the industry is beginning to recover from last year's meltdown.
Yet closures of funds of hedge funds, roiled by losses and the failure of many to avoid the Madoff fraud, accelerated to a record of nearly 200 in the quarter, or 8% of all such funds. That attrition rate doubled from the record set in the 2008 fourth quarter.
The number of hedge funds liquidating assets fell by half the first quarter, to 376 from a record 778 in the fourth quarter, a period when a $152 billion was removed by cash-strapped investors.
Investors withdrew $103 billion from hedge funds in the first quarter, HFR said.
Yet the first-quarter data is still troubling for hedge fund managers, representing an attrition rate of 4%, the second-highest ever recorded by the research firm.
Since the middle of last year, as financial markets spiraled out of control, nearly 1,200 funds have disappeared. The hedge fund industry now numbers about 9,050 funds.
"Although risk aversion began to recede from historical levels in (the first quarter), the structural consolidation which has been ongoing for several quarters continued to transform" the industry, said HFR President Kenneth Heinz.
The ranks of hedge funds were bolstered by a rising tide of new launches. About 150 new funds were launched during the first quarter, the most since the 2008 second quarter, HFR said.
The Chicago-based firm also found that average management fees slipped again during the first quarter, down to 1.57%. 
