This is not surprising: In July, just three hedge funds launched, compared with 40 a year ago, as reported on the Institutional Investor website. The larger issue is whether institutional demand will dry up long-term. Previously, we noted that pensions really do not have all that much invested in alternative investments. So we were bullish that the top pensions' need for greater returns would keep them at the trough, especially the private equity trough. But hedge funds may be another matter. There's a lot of talk that some institutions are wary now. We've seen some big outflows in July (see above item). Time will tell whether this is permanent. Another way to look at it: this is a tremendous buying opportunity. The ones that have fared well through the crisis may really thrive.  

For more:
- here's the article from II's website
- here's an item from FINalternatives