Three hundred and forty four hedge funds liquidated in the third quarter, considerably higher than the previous record of 267 in the fourth quarter of 2006, according to Hedge Fund Research.
Year to date through the first nine months of 2008, 693 hedge funds have shuttered, up from 409 in the first three quarters of 2007. At this rate, this years liquidations could surpass the record of 848 in 2005. Only 563 hedge funds shut down in all of last year.
The hedge fund industry is currently experiencing a structural consolidation that mirrors broader trends across the entire financial industry, Hedge Fund Research President Kenneth J. Heinz told The Wall Street Journal. The combination of a sustained increase in asset price volatility with the decrease in liquidity has widened the differentiation between funds and increased the challenges for both funds and investors.