WEST PALM BEACH, FL (HEDGECO.NET) – When the German financial market regulators approved retail hedge funds for investors in Germany, everyone expected a big rush by investors to put up their assetsinto such vehicles. However, it appears that the German hedge fund investors are not yet convinced about investing in hedge fund strategies yet. Up to date, very few hedge fund products are availablein the markets.
German investors seem to be embracing offshore hedge funds more than onshore funds. It is unclear why such is the case, but market analysts think the German hedge fund market is still in its infancy stages, and will take quite a bit of education to get investors up to speed with hedge funds and their investment process as well as its strategies.
James Dilworth, head of Goldman’s fund investment management division in Germany said, �It is clear investors want to get away from market risk.� Goldman Sachs said about 30% of its first quarter asset inflows in Germany went into hedge funds, compared to about 2% prior to the introduction of the new hedge fund laws for retail investors.
Another hedge fund manager in Germany, Man Group has not seen significant asset inflows into hedge funds, but according to Man, there seems to be a growing interest in such vehicles. BaFin, the chief German financial market regulator, introduced the new investment modernization law in 2003.
According to Christoph Moeller, head of sales and marketing at Man, �The legislation has given an official seal of approval to hedge funds as an asset class.� According to published reports, only about 2 percent of German assets are dedicated to hedge fund management, but there are reports which claim that some German pension plans are gearing up to invest up to about 20% of their pension assets into hedge funds.
Market hedge fund analysts think the second half of 2004 will see significantly higher German investments into hedge fund strategies. According to Mr. Moeller, �The [onshore] race hasn’t really started yet, but everyone’s getting warmed up.� Some analysts estimate that about US$5 billion will be flowing into the German hedge fund portfolios throughout the remainder of 2004.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: [email protected]
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