Performance of the world's hedge fund sector has held up relatively well considering the pounding inflicted by global markets in 2022, with macro strategies being the standout performer. The number of new hedge funds entering the market fell slightly in the third quarter of 2022, but so did liquidations.

Launches of new hedge funds slipped slightly in the third quarter of last year, reaching the lowest level since the final three months of the crisis-hit year of 2008, figures showed last week. 

The estimated number of new hedge fund launches fell to 71 in Q3 2022, a fall from 80 launches in the preceding three months, according to Hedge Fund Research. Separately, the number of hedge fund liquidations also declined over the prior quarter, as an estimated 145 funds closed their doors in Q3 2022, down from 156 fund liquidations in Q2 2022, HFR said.

In the 12 months to the end of September 2022, 449 total new hedge funds were launched, while an estimated 544 funds were liquidated, HFR said.

In performance terms, the Chicago-based research firm’s HFRI Asset Weighted Composite Index gained 0.5 per cent year to date through November, indicating that larger managers have outperformed smaller funds.

Some hedge fund strategies have fared well even while broader equity and bond markets were hit by rising interest rates. For example, macro strategies, which take views of currencies, commodities, fixed income, and futures markets using macroeconomic principles, have done well. The investible HFRI 500 Macro Index surged 14.3 per cent from January 2022 through November, with gains driven by short equity and fixed income positions, as well as long commodity and US dollar positions as the US Federal Reserve continued to raise interest rates.

After producing a 9.9 per cent return in 2021, the HFRI 500 Fund Weighted Composite Index showed that it could still protect capital, with a decline from January to November of just 2.78 per cent, a far less severe fall than for tech stocks, for example.

The average hedge fund fee was 1.35 per cent in the third quarter, a slight fall, HFR said.