The Opalesque 2011 U.K. Roundtable, which took place July 5th in London, consisting of U.K. based hedge fund experts found that London is still the dominant location for hedge funds in Europe, with the highest concentration of Europe’s talent, assets, risk taking, service providers and new launches.
London is still very much the dominant location for hedge funds, said Charles Tritton, CIO at De Putron Fund Management. There has been a lot of talk about Switzerland, Monaco, and various other places within Europe gaining market share, but in terms of AuM they are still small, especially when it comes to where the risk is being taken. I think it is interesting to note that we have Norwegians, Swedes, French, German and English working in our fund, and also that the service providers are still based here in the U.K.
I do think if some of the overseas locations, for example Switzerland, would actually scale up their capacity to service our industry better, their market share may grow in the long run. However today the probability that your performance suffers from a move out of London is reasonable high and performance remains the most important asset of a hedge fund, he added.As an industry, hedge funds continue to play an increasingly important role for institutions, and via UCITS also for retail investors.
However recently, there has seen some disquiet about the hedge fund industry in the U.K.: the tax regime is regarded as unhelpful or even a threat, and while some fund managers voted with their feet, others not willing to move physically have set up an asset management business in Malta and continue to just provide research from the U.K.
I agree London is dominant in European hedge funds, but the tax regime is unhelpful and is eroding its dominance. There is definitely cause for the government to look at these issues again, as tax is a very important consideration for nearly all concerned, said Julian Treger, co-founder and partner at Audley Capital. I agree London is dominant in European hedge funds, but the tax regime is unhelpful and is eroding its dominance. There is definitely cause for the government to look at these issues again, as tax is a very important consideration for nearly all concerned. Particularly in Europe, the fixation on microsecond liquidity is, however, not beneficial, and I believe people in the U.S. are quite puzzled by this.
A lot of money is flowing into UCITS, but in some instances performance is disappointing and up to 50% lower than what the true hedge fund should be doing. Investors in Europe need to accept different risk profiles for different duration investments. Moving over a bit into medium-term investments will present them interesting opportunities, because it is a much less crowded space. If you are going to be in a microsecond fund, those are not going to be able to perform as easily, because you need some time for these investments to mature, he added.
(LB)