The rate of hedge fund launches in Europe slumped to a six-year low in the first half of 2008, according to industry publication EuroHedge, part of the Hedge Fund Intelligence group.

Just 106 funds opened their doors to new business, compared with 190 in the first six months of 2007, the lowest total since the 84 recorded in the bear market of 2002.

These new funds raised total assets of $10.8bn (£5.4bn, €6.8bn), down from $15.5bn in the same period last year and the lowest figure since the $9.4bn raised in the first half of 2004.

“The global credit crunch and extreme turbulence across the financial markets have resulted in a sharp decline in the number of new hedge fund launches and the capital raising climate has become increasingly tough,” said Neil Wilson, editorial director of Hedge Fund Intelligence.

The European data tally with half-yearly figures from elsewhere, with the number of US fund launches tumbling 50 per cent from the first half of 2007 and assets raised by new funds in Asia Pacific sliding from $5.7bn to just $1.9bn.

According to Mr Wilson, there is little appetite for start-ups by new, untried hedge fund groups.

However, many existing managers are successfully expanding their rosters and there has been a pick-up in spin-offs from banks, which may be seeking to reduce exposure to their hedge fund operations.

Overall, investors do not seem to have lost faith in hedge funds, with 53 funds closing in Europe in the first half, broadly in line with full-year closure rates ranging from 110 to 126 in the previous three years.

“We haven’t seen a sharp rise in closures yet,“ said Mr Wilson. “It’s in parallel with previous years.”

Returns across the hedge fund industry have been pretty flat so far this year, largely avoiding the ructions in global equity markets. The HFRI fund weighted composite index, compiled by Hedge Fund Research of Chicago, dipped 0.75 per cent in the first six months of the year.

The new launches were dominated by Brevan Howard’s multi-strategy fund, which raised $2.5bn.

However, few event driven or convertible arbitrage funds saw the light of day.