Survey Shows European Hedge Fund Industry In Good Health

by Phillip Morton, Investors Offshore.com

28 July 2006

The number of new hedge funds launched in Europe hit record levels in the first half of 2006, according to a survey by global hedge fund information provider HedgeFund Intelligence.

The survey, published in the July edition of EuroHedge magazine, shows that at least 170 hedge funds were started up in the first six months of the year, twenty more than in the comparable period in 2005. The new fund launches collectively raised assets of $11.4 billion - down slightly from the $13 billion raised in the first half of 2005.

“The record pace of new fund launches shows an industry in good health,” commented EuroHedge editor Nick Evans.

“It demonstrates the growing enthusiasm of all types of investors for alternative investment strategies, the success of established hedge fund managers in expanding their businesses and the continued ability of talented new managers to start their own operations," he added.

The survey found the new hedge funds were raised by an increasingly wide range of institutional, boutique and start-up firms, but the reduced volume of assets shows that there have been fewer large scale or ‘blockbuster’ launches so far in 2006. By comparison, in the first six months of last year, five new European hedge funds launched with assets of $1 billion or more each.

Equity strategies continue to account for the major share of new European hedge fund launches, with 106 of the 172 funds included in the EuroHedge survey being equity funds.

European long/short equity remains the largest single category, with 41 new funds raising a total of $2.2 billion. Global equity was the next biggest, with 32 funds raising $1.6 billion compared with the 24 funds that raised $575 million in the first half of 2005. Equity market-neutral funds raised another $1.1 billion.

There were 12 new Asian equity funds, raising $1.1 billion, with 16 new emerging markets equity funds also raising a further $335 million.

The event-driven sector also showed a substantial rise in the first half of 2006, with 12 new funds, as opposed to three in the first half of 2005.

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