| Hedge Fund Observer: European hedge funds headed for a bumper year |
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| 07/08/2005 | |
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European hedge fund managers have disregarded rough investment conditions in the first half of 2005, launching hedge funds faster than ever before and convincing investors to place their monies with them. According to the trade publication EuroHedge, 150 new European hedge funds raised more than $13bn of assets in the first half of 2005. The publication's half-yearly survey of the European hedge fund industry shows that the number and size of new fund launches will outgrow last year's record collect of $22bn scattered among 250 new funds. Reflecting a worldwide trend, a significant change in the type of new funds coming through so far this year has been in the number of larger launches. In the first half of the year, there were five new launches with assets of $1 billion or more at the outset, while there were just two in the whole of 2004. "These large new launches demonstrate the growing trend to launch hedge funds that are on an institutional scale from the outset – not just in size and capacity, but also in their infrastructure and operational set-up", states EuroHedge. However, global data provided by Hedge Fund Research pointed to a sharp fall in the worldwide collect of hedge funds in the second quarter of 2005. The research company said that only €9.1bn of fresh new money was injected in the global hedge fund industry between April and June of this year, compared to €22.6 in the first three months. "With moderating returns and generally difficult market conditions, hedge fund investors are being cautious about allocating new funds to the industry", analysed Joshua Rosenberg, president of Hedge Fund Research. Strategies From a strategy perspective, long/short equity continues to act as the main engine of hedge fund growth, with 39 new European long/short funds raising $2.66 billion in the first half of 2005, according to EuroHedge. A further 24 global equity funds raised $575 million. Together with new Asian and emerging market funds managed in Europe – which raised $1.68 billion – equity strategies accounted for more than half of the 150 new funds. While equity-based funds are numerous, they are also usually smaller, with larger funds being found in other non-equity areas. For instance, in macro strategies – which grew tenfold from the first half of 2004 - just nine new funds accounted for $2.5 billion in assets. Four funds raised $1.3 billion in fixed-income, which continued to grow strongly along credit strategies, up to $2.5 billion from $2 billion in the first half of last year in spite of some of the problems seen in the credit markets in May. The biggest drop, in terms of the number of new launches, was in arbitrage strategies – including event-driven, convertible arbitrage, statistical and quantitative arbitrage and mixed arbitrage. J.L. |
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