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European Institutional investors shy away from Hedge Fund investments

New York (HedgeCo.net) – This month’s edition of Preqin’s Hedge Fund spotlight shines some light on a change in European investor’s appetite for Hedge Fund investments.

Among allocators who invest more than $1 billion in Hedge Funds, 24% came from Europe. Shrinking from 33% in the 2012 report.

Preqin states that the North American investors contain “a number of large pension funds, asset managers and endowment plans, all of which contribute a signi?cant proportion of capital to the asset class” while their European counterparts have “been reducing allocations to hedge funds over the past year.”

European hedge funds have struggled in the past few years and have battled both a changing economic landscape as well as increased regulatory clampdown. The UK is home to about 75 per cent of the European hedge fund industry, and the Financial Times reported that new regulations which are being put forward in an effort to clampdown on tax avoidance by UK-based hedge funds, could raise tax bills by as much $20bn a year.

The Preqin report also looks at how the large investors are allocating to hedge funds and finds that 9% of investors solely invest through funds of hedge funds and 34% of institutional investors only use multi-manager funds.

Preqin states that the reason for this is that “larger investors tend to have more internal resources dedicated towards hedge funds, giving them the platform and expertise to construct their own single-manager portfolio, rather than relying on the expertise of fund of hedge funds managers.”

Alex Akesson
Editor for HedgeCo.net
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