| Hedge Fund Observer: Despite a national regulation, the French hedge fund industry is primarily about multimanagement |
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| 18/06/2006 | |
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The hedge fund regulation implemented in 2004-2005 in France has had a positive effect on the French hedge fund industry, but most institutions still refrain from investing directly in licensed hedge funds, according to Asterias, an independent research consulting firm. "The onshore market is undergoing development in France", confirms Sophie van Straelen, the managing director of Asterias, which publishes a quarterly bulletin on the state of the industry. At the end of the first quarter of 2006, French regulated hedge funds and funds of hedge funds assets amounted to €17.8bn. Over 80% of these assets are invested in ARIA funds of funds, which is the regulated alternative multimanagement vehicle. The subscription to those vehicles progressed 25% during the first three months of the year. The development of a French onshore market has led to the creation of more liquid assets that can be distributed to a larger investor base and that answer the expectations of institutional investors. "We notice that there are more and more hybrid multimanagement products that mix traditional and alternative assets", says Ms Van Straelen. According to Asterias, a quarter of the ARIA fund of funds are invested at a rate of between 30 and 40% in hedge funds, the remaining portion being directed towards more liquid assets. « Nevertheless, institutional investors are getting interested in investing directly in hedge funds since the regulation has brought a certain transparency to the market", says Ms Van Straelen. This 'interest" has translated into a 30% growth of the assets managed directly. However, this growth has been largely propelled by a single fund manager, Crédit Agricole Asset Management, whose fund "Dynarbitrage VAR8" accounts for 89% of the total assets of the leveraged ARIA vehicle, which is much more popular that the non-leveraged ARIA vehicle. Under the French regulation, hedge funds can be either managed under a vehicle called ARIA EL which allows for a leverage effect of 4, or under an ARIA Simple vehicle that allows for a maximum leverage effect of 2. The ARIA EL vehicle accounts for 13% of the total assets of the French industry while ARIA simple accounts for a weak 0.32%. J.L. |
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