Hedge funds experienced the highest liquidation rate in a decade last year – 5.7% – more than twice 2004's 4.2%, according to Bloomberg News, citing Hedge Fund Research. In actual numbers, 484 of the total 7,436 hedge funds shut down as of Sept. 30, compared with 267 for all of 2004. Still, hedge funds over all finished the year at 9.2%, slightly ahead of the 2004 figure of 9%. Once again a slow start followed by a strong finished saved the day. Ironically, more hedge funds launched in the first three-quarters of the year – 1,580 – compared with 1,406 for all of 2004. Competition apparently is forcing funds to fizzle.

In addition to earlier reported closures by Bailey Coates, Pioneer Alternative Investments, Olympus Capital Management, JO Hambro, Lakeshore International and Severn River Capital, are Olea Capital, RedSky Partners, Wickam Capital, Zephyr and three of American Express Asset Management's six hedge funds. Most of the closings involved convertible arbitrage and long/short equity strategies.