Key Takeaways
- • Hedge fund launches rose to an estimated 165 new funds in Q3 2025, bringing the year-to-date total to 427 through Q3, per Hedge Fund Research (HFR), on track for the highest annual total since 2021.
- • Liquidations held at historically low levels, with an estimated 77 funds closing in Q3 and 215 year-to-date, versus an estimated 406 liquidations in 2024.
- • Total hedge fund industry capital reached a record $5.15 trillion at the end of 2025.
- • 2025 was the strongest year for hedge fund returns since 2009, supported by elevated volatility, FX shifts, divergent macro policies, rising US corporate M&A and a resurgent Hong Kong IPO market.
- • Average industry management fee held at an estimated 1.34%, below 1.4% since Q3 2019, while the average incentive fee was 15.8%, down 11 basis points year over year.
Summary
Hedge fund launches accelerated toward the end of 2025 while liquidations fell, according to WealthBriefing, which drew on data from Hedge Fund Research (HFR), the Chicago-based research firm. The period followed what the article describes as one of the strongest years for hedge fund returns in general since 2009, in the aftermath of the global financial crisis.
HFR estimates that 165 new funds launched in the third quarter of 2025, lifting the year-to-date total to 427 through Q3. That pace is on track to be the highest annual total since 2021. By strategy, Relative Value Arbitrage led new launches with an estimated 70 funds in Q3, followed by equity hedge with 47 and macro with 41. The largest category for liquidations was equity hedge.
Liquidations remained at historically low levels. An estimated 77 funds closed in Q3, bringing the 2025 total to 215 through Q3, compared with an estimated 406 liquidations in 2024. Total industry capital reached a record $5.15 trillion at the end of 2025.
The article attributes the improved environment to a period of higher volatility following Russia's invasion of Ukraine, shifts in foreign exchange rates, diverging macroeconomic policies, a rise in US corporate M&A activity and a resurgence in Hong Kong's IPO market. These conditions followed a difficult decade that ended with the pandemic.
On fees, the average industry-wide management fee was unchanged quarter over quarter at an estimated 1.34%, remaining below 1.4% since Q3 2019. The average incentive fee ended the quarter at 15.8%, up 1 basis point from Q2 but down 11 basis points from a year earlier. Goldman Sachs, UBS, JP Morgan and Morgan Stanley remained the top prime brokers, while SS&C GlobeOp, Citco Fund Services and IFS State Street were the leading administrators heading into the final quarter of 2025.
HFR estimates that 165 new funds launched in the third quarter of 2025, lifting the year-to-date total to 427 through Q3. That pace is on track to be the highest annual total since 2021. By strategy, Relative Value Arbitrage led new launches with an estimated 70 funds in Q3, followed by equity hedge with 47 and macro with 41. The largest category for liquidations was equity hedge.
Liquidations remained at historically low levels. An estimated 77 funds closed in Q3, bringing the 2025 total to 215 through Q3, compared with an estimated 406 liquidations in 2024. Total industry capital reached a record $5.15 trillion at the end of 2025.
The article attributes the improved environment to a period of higher volatility following Russia's invasion of Ukraine, shifts in foreign exchange rates, diverging macroeconomic policies, a rise in US corporate M&A activity and a resurgence in Hong Kong's IPO market. These conditions followed a difficult decade that ended with the pandemic.
On fees, the average industry-wide management fee was unchanged quarter over quarter at an estimated 1.34%, remaining below 1.4% since Q3 2019. The average incentive fee ended the quarter at 15.8%, up 1 basis point from Q2 but down 11 basis points from a year earlier. Goldman Sachs, UBS, JP Morgan and Morgan Stanley remained the top prime brokers, while SS&C GlobeOp, Citco Fund Services and IFS State Street were the leading administrators heading into the final quarter of 2025.
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