Research

2009 Key Trends in European Hedge Funds

Introduction

After a very challenging 2008 and 1Q2009, the European hedge fund industry has witnessed a remarkable growth during the March to August 2009 period, bringing the size of the industry back to end-2008 level. European managers returned strong results of 3.34% in September, bringing the YTD performance to 19% in 2009. This is the strongest YTD September performance since 2000 (when the sector had returned 21% by the ninth month). The sector had grown at a swift pace since 2000, reaching its highest point in June 2008, with assets of US$472 billion, before shrinking rapidly in the face of heightened volatility across all asset classes and massive redemptions in the latter half of 2008 and in 1Q2009.

Figure 1: Industry Growth over the Years

2009 YTD AuMs

2009 has been a year of mixed fortunes for European hedge funds as the sector suffered heavily during the first quarter, facing widespread redemptions and suffering serious losses amid the downturn – the industry reached its nadir in March 2009 with AuMs shrinking 10% in three months. Since then, however, we have seen an impressive rally, and currently, AuMs of European hedge funds stand at the same level as that of December 2008. Managers have posted strong gains through performance while the trend of redemptions was also reversed in May as investor confidence returned and risk appetites gained strength.  Currently, assets under management for European hedge funds stand at US$330 billion while the Eurekahedge Europe Hedge Fund Index is up 19% YTD.

In terms of the number of funds, the changes in the figures are not so substantial; in 2008, only 2.2% of the funds closed down as opposed to a steep 29% decline in assets. While the trend of net decline in AuMs continued through...

 

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