Hedge fund assets managed out of London grew 18 percent in 2005 to $225 billion, making London one of the fastest growing hedge fund centers, said the 2006 edition of IFSL’s Hedge Funds report.
Growth in assets in 2005 was however lower than in previous years mirroring a global trend Although New York remains the leading hedge fund center, London’s share of global assets doubled to 20 percent between 2002 and 2005 as growth in Europe outpaced growth in the US. This was largely a result of an increase in investment from European institutional investors such as pension funds and insurance companies during this period.
London is the largest center for European hedge fund managers. The 700 hedge funds located in London accounted for three-quarters of European based hedge fund assets at end-2005. If figures for fund of funds and US hedge funds with a trading desk in Europe are taken into account, London’s share was more than 90 percent, a news release said. Other locations for hedge fund managers in Europe include France, Spain, Sweden and Switzerland.
Factors underpinning London’s strong position include its local expertise, the proximity of clients and markets, a strong asset management industry and a favorable regulatory environment. London is also a leading center for hedge fund services, notably prime brokerage services offered by the leading London-based investment banks. More than 90 percent of European prime brokerage activity is conducted through London.