In 1949, Alfred Winslow Jones, a journalist and sociologist, launched the first hedge fund (or “hedged fund” as he called it at the time) after becoming fascinated with stock-market forecasting. His investment strategies were extremely successful, and many individuals and financial firms started their own hedge funds. Today, there are approximately 11,000 hedge funds in the world—up from 3,873 in 2000, and only 200 funds in 1968. As of December 2014, worldwide hedge fund industry assets under management surpassed $3 trillion.
Challenging economic conditions, increasing government regulation (and rising costs for compliance), strong competition between hedge funds for investment dollars, and poor return on investment in recent years at many hedge funds have prompted many firms to close in recent years. From 2012 to 2014, an average of 883 hedge funds a year closed their doors, according to Hedge Fund Research. This average is much higher than during the pre-recession years of 2000–04, when only 159 funds closed per year.