New hedge fund manager launches are at decade lows, and escalating costs of regulation are blamed. However regrettable this may be, if we widen the definition of seeding to include individuals, teams and accounts initiating hedge fund strategies under various corporate umbrellas, the picture seems more encouraging.

Providers of seed capital for hedge fund strategies need not have the word “seeder” stamped on their T-shirt or forehead – and independent management companies and funds are only one avenue. Many of the largest seeders do not appear on any traditional list because seeding is only one facet of their business. Pension funds (e.g., CalSTRS), endowments (e.g., Harvard), insurance companies (e.g., XL), family offices (e.g., Lord Jacob Rothschild’s RIT Capital Partners), multi-strategy hedge funds (e.g., Balyasny), hedge fund billionaires (e.g., David Tepper), managed account platforms (e.g., Lyxor), commodity trading houses (e.g., Glencore) and even the most traditional asset managers (e.g., Fidelity) are all effectively seeding hedge fund strategies in-house or externally, and sometimes hiring new people to do so. And individuals asked to manage a dedicated managed account could well be doing something new, but may not make it into any launch statistics.

Multi-strategy funds such as Balyasny, Millennium Partners or UBS O’Connor arguably run a “mini prop desk” model whereby individual traders have freedom to run their own sleeves of capital in distinct strategies, and may get the chance to build up a portable track record that can be used later on, either for an in-house launch or their own shop. Managers such as BlueBay, our cover story this month, have developed strategies within multi-strategy funds that later become independent funds. Some investment managers only want to manage money, and do not want to manage an organisation or feel the need to have their own name on the door.

Leaving aside larger organisations, plenty of individuals are developing hedge fund strategies that are not picked up by the radar of new launches. Some boutique brokerages have over 100 clients running personal capital of between $5 million and $30 million – and being under the €100 million threshold means all of these can avoid AIFMD if they wish. Those who want a regulated fund structure from day one are looking at lower-cost domiciles, which could include Malta and Gibraltar inside the European Union. Offshore the British Virgin Islands has developed a lighter-touch structure designed for start-ups.

Plenty of seeding and innovation is taking place, but not necessarily in standalone funds or management companies and some of the nascent activity is also behind the scenes. It seems that the new launches of the future might be somewhat more mature than those of the past, in which case the average life of a hedge fund might also grow beyond current estimates of three to five years.