Growing Number of European Hedge Funds Joining Platforms

New York ( – There is a trend developing with European hedge funds, or at least with the smaller funds. A growing number of them are joining platforms rather than trying to remain independent. According to a recent Reuters’ article, the migration is a result of rising costs and increasing regulatory issues. The problem seems to be greater in Europe than it is in the United States or Asia with 33 hedge funds shutting down already in 2015 which is coming on the back of 370 closures in 2014 according to Eurekahedge.

While it isn’t clear how many managers are simply closing up shop versus joining a platform, a growing number are seeking the platform route. There are different structures for the platforms, but none of them are like HedgeCoVest. In most of the current structures, the manager becomes an employee of the platform firm and then gets a cut in the fees generated or the platform charges the manager for legal support and a trading infrastructure.

Interestingly, most of the managers we speak to are more interested in trading and analyzing the market than they are dealing with operations and marketing. That is where the HedgeCoVest platform has been popular among managers because it allows the manager to remain independent and add a source of revenue without adding to the manager’s expenses or regulatory issues.

Rick Pendergraft
Research Analyst

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