While their fortunes can wax and wane, the sector's performance remains an important focus for the wealth management sector.

New hedge fund launches rose and liquidations remained steady at the beginning of 2024, latest industry figures show. Across the whole sector, assets hit a record of $4.3 trillion, according to Chicago-headquartered Hedge Fund Research.

The estimated number of new hedge fund launches in the first three months of 2024 surged to 146, rising by 70 per cent from the prior quarter and the highest level since Q1 2022. In 2023, an estimated 438 new funds were launched.

An estimated 106 funds closed during the quarter, on par with the prior quarter estimate of 104 liquidations. For the full year 2023, an estimated 415 funds liquidated, the lowest level of liquidations since 2004. 

Equity Hedge strategies were the largest group of newbie funds: an estimated 75 new funds opened in the first quarter, or more than half of the quarterly total.

HFR said its HFRI Asset Weighted Composite Index® (AWC) gained by 5.7 per cent year-to-date through May, while the HFRI Fund Weighted Composite advanced by 5.2 per cent, as large funds outperformed small and mid-sized firms.  

Macro strategies led year-to-date strategy performance through May. The HFRI Macro (Total) Index rose 6.9 per cent over the first five months of the year, while the HFRI Macro (Asset Weighted) Index increased by 7.8 per cent. 

Hedge funds haven't always enjoyed strong returns – and some strategies have hit trouble, prompting pushback against their relatively high fees. However, despite certain naysayers such as Warren Buffett, they appear to be a fixture in the wealth management landscape. At a briefing in May for journalists held by Switzerland's Union Bancaire Privée, reporters heard that recent shifts in interest rates, for example, have been positive for macro funds.