Hedge funds fail, but not as fast as feared

Receading Hedge

Hedge funds are continuing to shut down, but the pace of failures isn't quite as bad as feared.

Some 200 funds liquidated during the third quarter, according to industry data tracker HFR. That brings the total of closed funds to 661 through September, not quite on pace to match the 1,023 that shut in 2009, the previous record outside of the peak of the financial crisis in 2008 when 1,471 funds closed.

The number that shut in the third quarter also represents a slight decline from the same three month period in 2013, when 222 shut. And more funds are starting: HFR data shows that 814 funds have launched this year.

Previously reported hedge-fund shutdowns in 2014 include a macro fund run by BlueBay Asset Management; commodity and emerging markets vehicles managed by Brevan Howard Asset Management; Anderson Global Macro; Perella Weinberg's Xerion Fund; and Lonestar Capital.

Read More Hedge fund Lonestar shutting down

Hedge fund industry assets also increased to a record during the third quarter. Hedge funds and funds of hedge funds now manage $2.82 trillion, according to HFR.

"With global industry capital at a record level, competitive market pressures continue to shape the evolving landscape of the hedge fund industry, with new launches identifying areas of opportunity while funds which under perform remain vulnerable to investor capital redemptions," HFR President Kenneth Heinz said in a statement.

Read More Hedge fund shut-downs pick up in 2014

Hedge fund performance has been mixed this year. The Absolute Return U.S. Equity Index, which tracks funds that bet on U.S. stocks, is up 3.74 percent in 2014 through November. The S&P 500 Index gained 11.86 percent over the same period.

The top performing mainstream strategy has been funds that bet on mortgage-backed securities; the Absolute Return MBS Index is up 8.74 percent through November. That compares with the iShares Barclays MBS Bond Fund's gain of 4.87 percent.

The worst has been funds that focus on Latin American stocks; the Absolute Return Latin American Equity Index is down 1.32 percent over the first 11 months of the year, versus the iShares S&P Latin America 40 Index loss of 3.78 percent.

The Absolute Return Composite Index, an aggregation of all strategies, is up 4.67 percent through November.

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