Data Reveals Explosive European Hedge Fund Growth

by Carla Johnson, Investors Offshore.com

21 October 2004

Growth in the European hedge fund market has exploded in the twelve months to June 2004, increasing in size by 70% and outpacing growth in any other region, a European conference heard on Tuesday.

According to Naim Abou-Jaoude, head of alternative investments for asset management firm Dexia AM, Europe makes up one quarter of the global hedge fund market, compared with a share of just 6% in 1999.

Citing figures from EuroHedge, he added that the 70% growth in the year to June has taken European hedge fund assets under management to $216 billion.

By comparison, world growth during this period was 13%, with assets under management growing from $766 billion to $866 billion.

Whilst Abou-Jaoude observed that long-short funds have been traditionally the strategy of choice in the hedge fund market, a lack of market volatility and an increasingly risk-averse clientele means that strategies such as fixed income and credit arbitrage are now more in vogue.

In the first half of 2004, long/short equity strategies represented 25% of European alternative funds, against a figure of 41% in 2002. Meanwhile, noted Abou-Jaoude, fixed income and credit strategies have seen assets double from $4.8 billion to $8.7 billion in the past twelve months.

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