HF Liquidations Fall to Lowest Level in Two Decades as Assets Near $5T — Evening Brief – 10.21.25
Liquidations across the hedge fund industry has plunged to their lowest level in more than 20 years, according to data from HFR, Inc. and other providers. As of the first half of 2025, just 138 funds have shut down—a sharp drop from the 406 liquidations recorded in 2024, which itself was the lowest level since 2004. In Q2 alone, only 65 funds returned capital to investors.
At the same time, hedge fund assets are approaching $5 trillion, supported by improved performance and renewed investor appetite. Equity-oriented hedge strategies have led the rebound, helping bolster confidence in the industry.
“Institutions continue to increase allocations to both existing funds as well as newly launched funds, with the goals of opportunistically navigating these historic market cycles and managing unprecedented opportunities alongside evolving policy uncertainty and risk,” said Kenneth Heinz, President of HFR.
Data from PivotalPath show that the PivotalPath Hedge Fund Composite index rose 1.9% in September and is up 8.7% year-to-date. The firm monitors over 3,000 institutionally relevant hedge funds, spanning more than $3 trillion in assets. Meanwhile, Convergence Research reports that 929 new hedge funds were launched through September 2025 (versus 862 in the same period in 2024), raising $23.78 billion compared with $22.55 billion year-to-date last year. Existing funds also saw strong flows—$202 billion through September versus $190 billion in the same period last year.
Fee pressure remains modest: the industry-wide average management fee held steady at approximately 1.34%, down just 1 basis point year-over-year. The average incentive (performance) fee dropped to 15.79% in Q2 2025, down 18 bps from Q2 2024.
Together, these trends point to a hedge fund industry in resurgence: fewer failures, more asset gathering, rising launches, and steady (if slightly compressed) fees—all suggesting investors believe the era of hedge fund relevance has returned.