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Upsurge In Global Hedge Fund Liquidations

 

During the 1st quarter of 2020, more hedge funds have lost their business than ever since 2015. This happened due to investors pulling out their billions in assets and because of the insurmountable losses caused by the COVID-19 pandemic.

On 30th June 2020, Hedge Fund Research discovered that 304 funds liquidated worldwide within the 1st 3 months of the year. This is second-highest level, the first being 305 liquidated funds in the last 3 months of 2015, and it is also 50% higher than the last 3 months of 2019, with 198 funds liquidated. Moreover, investors pulled out about $33 billion as they got worried about the rising unemployment percentage, the crumbling economies, and the increasing virus’ death toll.

 

According to HFR, only 84 new funds opened for business in the 1st quarter of 2020, which was the slowest pace of new launches since the financial crisis in the last quarter of 2008 when only 56 new funds had opened.  The pace is even low compared to the last quarter of 2019 when only 89 funds had opened.

Hedge funds are struggling so much over the last few years that it is making fund-raising difficult. Seward & Kissel, the law firm, states that halt in travels had a massive impact on fund-raising. But, now some funds, which were closed for long periods of time, are now taking in new capitals as investors are interested in funds regarding credit, healthcare, and municipal bonds.

 

There is only 8,081 hedge funds and 1,167 funds of hedge funds now. And, more and more people are starting to believe William Ackman’s predictions as the billionaire hedge-fund manager had said that millions of people would die, industries would collapse, and the US economy would tumble into a deep recession unless there was a month-long nationwide lockdown to maintain the spread of the virus. He had encouraged people to self-quarantine for the betterment of the US, but in return he received massive backlash.

 

 

 

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