North America retained its standing as the dominant region for hedge fund launches in the third quarter.

North America-based hedge funds dominated launches of new funds in the third quarter of this year, with Asia-Pacific and European funds taking small shares, according to Preqin, the research firm. Data also showed that funds with an Asian focus dropped sharply.

A total of 118 hedge funds were launched globally through Q3 2016. North America-based fund managers accounted for 76 per cent of new launches, a 12-month high.

Managers in Europe represent 20 per cent of launches, down from 28 per cent the previous quarter, while Asia-Pacific-based managers represent just 3 per cent of new vehicles, a quarter of the proportion seen in Q3 2015, Preqin said.

The proportion of new funds launched that have a focus on the Asia-Pacific region fell from 9 per cent in Q2 to just 1 per cent in Q3, the lowest of any region. Funds with a global focus, however, accounted for 69 per cent of new funds, up from 58 per cent in Q2, while other regions stayed level.

Among leading hedge fund strategies, the level of new hedge funds launched which follow an equities strategy have fallen over the course of the year: 38 per cent of funds launched in Q3 pursue this approach, the third consecutive quarterly decline for the strategy. Meanwhile, event driven strategies accounted for 21 per cent of launch activity in the quarter, up from 12 per cent in Q2.

This growth in the level of event driven funds launched has been coupled with strong returns in 2016 so far; the Preqin All-Event Driven Strategies benchmark has returned 8.27% year-to-date.

“Although the largest proportions of both active funds and new fund launches continue to be those that pursue an equities strategy, there has been a continued decline in the proportion of fund launches using this strategy over the past three quarters. According to Preqin’s latest survey of hedge fund managers in June 2016, the largest proportion expect equity strategies to be the worst performing through the year," Amy Bensted, head of hedge fund products, Preqin, said.

"Despite this, equities funds have registered the highest performance of any leading strategy in Q3 2016, which may spur increased fund launches in the coming quarters. Overall, launch activity through the quarter has been dominated by funds run by North America-based managers, as well as funds with a global focus, while Europe- and Asia-Pacific-based firms have both accounted for a lower proportion of launch activity. On the part of Europe, this may in part be due to the uncertainty arising as a result of the unexpected Brexit decision in June, while in Asia cautious investor sentiment provides challenges for prospective new funds," Bensted added.