Investor demand for German domiciled hedge funds will grow to EUR40 billion in four years' time, according to the findings of a recently published study.
RCP & Partners, which conducted the research, arrived at this conclusion based on the estimates of 40 different hedge fund managers of demand in the sector by 2008, which ranged from EUR10 billion to as much as EUR200 billion.
Demand for German hedge funds has been very slow to lift off since the country’s regulator BaFin put in place new rules at the start of the year, with RCP putting inflows at about EUR1.2 billion during 2004.
Analysts believe the sluggish demand is down to a number of factors, but notably, BaFin’s approval process has come in for some criticism. Others attribute the lack of demand to a sceptical German investment public and poor performance in the hedge fund industry in general throughout 2004.
Meanwhile some in the industry, such as Christoph Braun, partner at asset management firm Lupus Alpha, believe Germans need more time to familiarise themselves with the new products.
“Those in the industry who had high expectations for demand were simply not patient enough," Braun told a roundtable in Frankfurt last week.
"The German investor needs time to get to know these products and realise that they will be crucial for diversification and performance,” he observed.
A comprehensive report in our Intelligence Report series examining offshore investment, offshore stock exchanges, and hedge funds is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp
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