Canary In The Mine?
I just read this article on the WSJ Blog about how 9 of our 10 hedge funds are not performing well enough to collect performance fees and that just 3% of hedge fund-of-funds are above their high water mark.
There are about 10,000 hedge funds but in the first half of this year about 350 shut down compared to about 500 in all of last year. This has to mean a lot of hedge funds are going to close down since no one is getting paid.
While there are many fewer venture capital funds in the US (about 800 in the last data I saw), if the performance distribution is similar for them, that means less than 100 VC funds are collecting performance fees. It’ll take longer to feel the pain, but I wouldn’t be surprised to see a lot of VC funds close up shop over he next year or two.