New hedge fund launches in Europe hit record levels in 2006, with both the number of new funds and the overall volume of assets raised by the new funds achieving rapid growth, according to the latest annual survey by specialist information provider EuroHedge.
The survey found a record 423 new funds launched in Europe during the year, a 27% increase on the 330 new funds which started in 2005. The new funds raised combined assets of $37.8 billion, which was also a record, a 35% increase on the $27.8 billion raised by new funds in 2005.
This strong growth in assets raised by new funds in 2006 also compared favourably with 2005, during which asset raising rose by 22%. However, the 2006 rate of growth in the number of new funds launching (27%) was slightly slower than 2005, when new fund launches rose by 32%.
The survey also showed a marked acceleration in the number and size of new fund launches over the second half of 2006. At the half-year stage in 2006, there had been 170 new launches in Europe raising assets $11.4 billion. In the second half, there were a further 250 new launches with combined assets of $26 billion. Four of the five largest launches of the year all started in the latter part of the year, raising combined assets of over $7 billion between them.
The biggest growth in 2006 in terms of individual strategy areas came in the event-driven category. The three biggest new launches of the year SRM Global ($3bn), Cevian Capital II ($2bn) and Montrica Global Opportunities ($1.12bn) -were event-driven. In total, 27 new event-driven funds raised just under $8.5 billion in 2006 double the number of new event-driven launches in 2005, and representing a fourfold increase in the overall assets raised in the event-driven category in 2005.
Global equity was the next category of growth, with 75 new funds raising just under $5.5 billion in 2006. This was almost double the number of new global equity funds (39) in 2005 and more than double the volume of assets raised ($2.7 billion).
European long/short equity strategies remained the largest category for fund launches, with 111 new European long/short and market-neutral equity funds launched during 2006, raising a combined $7.3 billion. This was in line with 2005’s figure of 110 European equity funds raising $7.2 billion.
A big rise in new European-based emerging markets and Asian equity funds further boosted the overall equity weighting in 2006, with a total of 70 new European-based Asian and emerging market equity funds raising combined assets of almost $4 billion.
Outside of the equity-related areas, the picture was more mixed in 2006. Despite poor conditions for fixed-income and macro strategies for much of the year, the volume of new funds held up in both categories with 30 new macro funds raising just under $2 billion and 21 new fixed-income funds raising $2.4 billion.