German Hedge Fund Inflows Fail To Match Expectations

by Carla Johnson, Investors Offshore.com

28 January 2005

While hedge fund sales in Germany fell far short of expectations last year, the country's fund management association, the BVI, has refused to accept that the industry has failed.

Speaking at BVI’s annual news conference last week, Axel Benkner, BVI chairman and head of Deutsche Bank’s hedge fund arm DWS, stated that products like hedge funds require “a long lead time,” dismissing criticism that the German industry has flopped as a “one sided” view.

When new regulations were introduced last year allowing the sale of hedge funds in Germany, it was forecast that up to EUR10 billion would be invested by the end of 2004.

However, net inflows have totalled just EUR706 million, while the BVI’s annual report for 2004 showed that approximately EUR100 million flowed into the sector in the second half of the year.

Meanwhile, investor inflows to DWS hedge funds totalled just EUR57 million last year after Benker predicted in 2003 that the funds would take in around EUR1 billion in the first year.

“With respect to larger volumes for hedge funds, we think that the time for this still lies ahead of us,” commented Benkner, adding the industry should take a longer term view of investor demand.

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