London May Lose Hedge Funds To Other European Cities, Report Suggests

by Carla Johnson, Investors Offshore.com

11 June 2003

A report recently released by PricewaterhouseCoopers has suggested that although London still dominates the European hedge fund industry, managers are increasingly choosing to locate in other European cities, most notably Paris, Frankfurt, Stockholm, Milan, and Dublin.

'Almost 70% of European single manager hedge funds are managed from London, despite the fact neither single manager hedge funds nor funds of hedge funds are domiciled in the UK,' the PwC report revealed, continuing:

'While London's dominance in hedge fund management reflects its role in the asset management industry generally and the depth of available resources, it is also due to the relatively light regulatory regime applied by the FSA, which classifies most hedge fund managers as 'lower risk' because of limited public access to their products.'

However, PwC went on to observe that the number of European-domiciled hedge funds is increasing as the result of new legislation enacted by several countries, creating a possible threat to London's dominance in the field of hedge fund management:

'European-domiciled hedge fund products are expanding, with France, Ireland, Italy, Luxembourg, Sweden and Switzerland all permitting the formation of domestic, single manager hedge funds and/or funds of hedge funds, in many cases due to recent legislation,' the accounting firm explained.

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