2019 is slated to be the worst environment that new hedge funds have seen to raise money in years, according to a new Bloomberg article. 

In fact, only one manager looking to start anew this year is going to start with more than $1 billion: Woodline Partners, founded by Citadel veterans Michael Rockefeller and Karl Kroeker, is based in San Francisco and is said to be focusing on technology and healthcare companies.

Additional funds opening in 2019 or slated to open in 2019 – many started by veterans of hedge funds that are now winding down - have all fallen short of the $1 billion mark.

For instance, Todd Westhus’s new fund started today with $500 million under management and a former trader from BlueCrest Capital started the year with $800 million under management. Another duo from Highfields Capital Management is set to open later in 2019 with about $500 million.

Given the success of passive funds over the last decade, and with major market indices rising significantly across the board, hedge funds have fallen out of favor heading into 2019.

Ilana Weinstein, founder and chief executive officer of hedge fund recruiter IDW Group stated: “You have to be borderline crazy to be starting a hedge fund in this environment and the only way you should do it is if you feel you have something differentiated to offer.”

And in 2019, it looks as though funds are going to see a far more difficult year than 2018, where managers like Michael Gelband’s ExodusPoint Capital Management and Dan Sundheim’s D1 Capital Partners started with commitments like $8 billion and $4 billion, respectively.

Over the first three quarters in 2018, $11.1 billion left hedge funds, marking the second time in three years that active managers saw outflows. This compares to 2008 where at least seven new firms started with $1 billion or more.

Bloomberg also highlighted several other fund openings slated for 2019:

• Michael Phelps plans to start Tresidor Investment Management in the second quarter with 10 investment professionals. It will focus on European high-yield bonds, leveraged loans, convertible bonds and sovereign debt and is targeting to eventually raise $1 billion to $1.25 billion, not including co-investments, according to people familiar with the firm.
• Parsifal Capital Management, founded by former BlueMountain Capital Management equity portfolio manager David Zorub, is receiving a $150 million seed from Blackstone, according to people familiar with the firm.
• Lauren Taylor Wolfe is opening Impactive Capital. She previously worked at activist firm Blue Harbor Group and will focus on environmental, social and governance investing with an activist bent.
• Martin O’Hare, Marcus Strub and Richard Ford, former managers at David Fear’s Thunderbird Partners, will start Fosse Capital Partners, an equity hedge fund, in the second half of 2019.
• John Aylward, who managed about $300 million exclusively for Paloma Partners at his London-based credit fund Sona Asset Management, plans to open to other clients this year.