European Hedge Funds Set To Grow Despite Regulatory Concerns

by Phillip Morton, Investors Offshore.com

18 August 2004

Whilst optimistic on growth and performance prospects, many European hedge fund managers remain concerned over regulatory issues surrounding the industry in the region, according to a new report.

The report by research firm Datamonitor, found that around 39% of wealth managers in Europe cite regulatory issues as a likely obstacle to hedge fund investment in the next couple of years.

However, the report also observed how rapid growth in demand for hedge funds has forced several European government to enact legislative changes to accommodate these loosely controlled investment collectives.

Further regulatory changes, aimed at achieving greater legal clarity and market exposure for hedge funds, will help to drive growth of more than 20% per annum in the high-net-worth individual market to 2007, Datamonitor believes.

Regulatory issues aside, the report also found that the majority of wealth managers, some 70%, see increasing diversification or the ability to gain an absolute return as the primary reason for investing in hedge funds.

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