Hedge fund launches in the opening quarter of the year rose to their highest level since 2007, according to new figures.

Chicago-based Hedge Fund Research said that 304 new funds entered the market in the three months to 31 March, narrowly eclipsing the 298 launches in the first quarter of 2011 and representing the highest quarterly figure since the final three months of 2007.

Less good news for the industry was that hedge fund liquidations also increased in the first quarter, with 232 funds closing. That represented the highest quarterly number of liquidations in two years.

The latest research by HFR also shows that hedge fund capital rose to $2.13 trillion during the first quarter this year.

HFR said that performance dispersion intensified during year's first three-month period, with the top 10 per cent of all hedge funds averaging a gain of more than 20 per cent, while the bottom 10 per cent declined by 28 per cent on average.

“Innovative hedge funds are launching and finding opportunities as large financial institutions look to deemphasise trading activities as a result of anticipated regulation, realised trading losses and enhanced risk management requirements,” said Kenneth Heinz, president of HFR.