Report Heralds Strong Growth In European Hedge Fund Markets

by Carla Johnson, Investors Offshore.com

06 January 2006

The market for investing in hedge funds in Europe is expected to grow significantly over the next three years thanks largely to improvements in financial regulation, according to a new report published by the Dublin-based firm Research and Markets.

While the European hedge fund market remains relatively small, regulatory changes will continue to help the regional market to grow rapidly, stated the report, which predicts that assets held by investors in hedge funds in France, Germany, Italy, Spain and the UK will grow to EUR202.2 billion by 2009, up from EUR89.7 billion in 2004, representing annual growth of 17.7%.

Drawing heavily on the European Alternative Investment Survey 2005 covering 96 asset managers in Europe, the report went on to observe that there are a number of "very large" competitors in the European hedge fund management market, with three of these holding assets of more than EUR10 billion in the first half of 2005.

However, the study also noted that the European market remains unstable because periods of poor performance in certain hedge funds would lead to competitors "quickly being placed under pressure".

Consequently, hedge funds will need a number of key features if they are to be successful in the future, including a history of strong investment performance and a strong brand, according to European asset managers.

Asset managers also expect successful hedge funds to offer increased transparency and fee structures which are tied to their performance.

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