The hedge fund industry is experiencing significant momentum, with new fund launches reaching their highest levels since 2021. According to the latest HFR Market Microstructure Report, 562 new funds debuted in 2025, driven by investors seeking protection against geopolitical instability, AI-driven market shifts, and cryptocurrency volatility.

While launches accelerated, fund liquidations remained near historic lows. Only 287 funds closed in 2025, the lowest attrition rate since 2004, compared to over 400 closures the previous year. This stability, paired with robust performance, propelled total industry capital to a staggering record of $5.16 trillion at the start of 2026.

The final quarter of 2025 saw a strategic shift, with Equity Hedge (65 launches) and Macro (35 launches) leading the way, overtaking Relative Value Arbitrage. Performance dispersion also widened significantly: the top decile of funds gained 47.3%, while the bottom decile lost 11.3%, creating a 58.6% performance gap that highlights the high-stakes environment for active managers.

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Source: https://www.hfr.com/media/market-commentary/hedge-fund-launches-highest-in-four-years-as-investors-position-for-volatility/