Dec 16, 2018

Why it's the worst time in years to run a hedge fund

The amount of money fleeing into money-market mutual funds hit $81 billion last week, the largest such flow on record. Meanwhile, the flows out of equity mutual funds, at $46 billion, were almost double any other week on record.

Data: Hedge Fund Research; Chart: Andrew Witherspoon/Axios

The big picture: What you're seeing is a risk-off flight to boring safe assets — which means that now is the worst time in years to try to open up a new hedge fund. Just 450 new hedge funds were opened in the first three quarters of this year, the lowest number in a decade.

  • The total number of hedge funds and fund of funds is now 9,760, per HFR — down from 10,142 in 2014. The sector isn't imploding, but it has long since stopped growing.

It's also a bad time to be running an existing hedge fund. Jabre Capital Partners this week joined a long list of other high-profile fund managers — John Paulson, Richard Perry, Highfields, Eton Park, Leon Cooperman and many others — who have decided to return money to their investors rather than keep on struggling in a tough market.

Why it matters: Public equities have rarely seemed less attractive as an asset class, even as big private companies like Uber, Lyft and Slack are set to IPO. If you have a good idea for how to make money in this market, good luck trying to find anybody to bet on you.

Go deeper: A hedge fund titan's lesson from the financial crisis

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Illustration: Aïda Amer/Axios

Public-health officials’ warnings about the coronavirus are sounding increasingly urgent, with one top CDC official asking the public yesterday "to prepare for the expectation that this might be bad."

Reality check: Other administration officials, including President Trump himself, were more subdued in their assessments. But underneath those tonal differences, the reality of the coronavirus is the same: It spreads quickly, and has already spread to many countries, making it likely to start spreading here, too.

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Democratic presidential hopefuls take the debate stage in South Carolina. Photo: Logan Cyrus/AFP via Getty Images

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