The overall global economic recovery has been tepid, and that uncertainty has carried over to hedge funds despite many new entrants to the market.

Hedge fund launches totaled 1,113 in 2011, according to data from Hedge Fund Research, with 270 taking the plunge in the final quarter of the year despite a third quarter that was roiled by high volatility and poor performance. The yearly figure is second only to the all-time start-up peak of 2007 when 1,197 funds launched as managers position themselves for growth.

In a report conducted by Hedge Fund Monitor, and Bank of America, the average hedge fund lost a little over 5% in the three months to the end of September 2011.

Despite a rocky conclusion for alternatives last year, total hedge fund industry capital rose slightly by 3% to $2.02 trillion, with approximately a total of 9,500 funds outstanding globally.

“It’s a positive time for the hedge fund industry—they should be honored for their resilience,” said an unnamed source.

The majority of the growth reportedly still occurs in the U.S. and Europe, with Asia as a third rising star.

While resiliency is essential for anyone trying to raise capital in tepid markets, emerging managers in Asia have been hard-hit by major allocators, which have ultimately dashed the hopes of a swift rise in assets for many emerging managers.

Much to their chagrin, a weak buy side is often a result of a weak sell side, and such is the case with Asian start-up hedge funds.

Funds of funds have customarily seeded rising hedge funds from the get-go. They too have receded industry-wide, thereby making it difficult for emerging hedge funds to leap from start-up to critical mass, said Sam Tabar, head of Asia-Pacific capital introductions at Bank of American Merrill Lynch to Bloomberg.

Some hedge funds, though, have been forced to halt operations in response to waning fund of funds support. Isometric Investment Advisors closed last December after its largest investor, London-based FRM Capital Advisors, a hedge fund seeding firm, said it would withdraw its cash. Black Link Capital also reportedly closed when an unnamed U.S. based fund of funds withdrew funding.

“I am seeing investor appetite for emerging hedge fund managers pick up in 2012 in rough correspondence with risk appetite,” said Patric de Gentile-Williams, chief operating officer of FRM. He told Markets Media that “new launches continue to reflect the existing distribution of managers”.

He cited that long/short equity, macro, event-driven and emerging markets may be the year’s most popular hedge fund strategies.

“Credit and commodities are less well represented, although one might expect an increase in European distressed manager launches following the interest shown for European situations by some of the most established distressed debt managers,” De Gentile-Williams continued.

Even so, hedge fund seeding firms are merely the start for most of the region’s emerging managers. Family offices and other private wealth sources have been known to be large supporters of start-up ventures. They, too, have been forced to pull back.

In addition to funding shortfalls, the key focus on amplifying due diligence, and having best operational standards continues to be highlighted within Asia’s hedge fund investor community, as a response to events such as the Bernie Madoff Ponzi scheme scandal.

“Half of all hedge funds blow up because of operational failures, not their investment process,” said Nate Anderson, director at Tangent Capital and chief executive of ClaritySpring, a hedge fund service provider that aims to ease operations between hedge funds and their allocators.

While running a hedge fund might require the same investing and trading expertise gained at sell-side proprietary trading desks, running a business at a hedge fund start-up “is a different skill set”, said Anderson.

“Investment profits come with the best infrastructure,” he added. “Raising money is a fully-fledged business.”