New European hedge fund launches set new records in 2005, both in the number of new funds and the total assets raised, according to industry information provider EuroHedge.
EuroHedge’s annual survey reveals that more than 330 new funds started during 2005, raising combined assets of $27.82 billion – up from the 250 funds that launched in Europe in 2004, with aggregate assets of $22.79 billion.
The figures, which show a 32% increase in the number of new funds from the previous year and a 22% increase in the total assets raised, demonstrate that the rate of growth in the industry remains very strong -despite an overall slowdown in the growth of assets flowing into the industry in 2005 that made for a tough capital-raising environment.
Although the average size of new funds launched in Europe declined a little in 2005 – to $83 million, from $90 million in 2004 – the year was notable for the large number of large launches.
Six new funds of over $1 billion each were launched during the year, with 14 new launches with assets of at least $500 million each and some 55 funds that raised assets of $100 million or more.
European long/short equity remained by far the biggest single source of new fund launches in 2005 – with at least 110 new funds (33% of the total), raising just over 25% of the total assets ($7.27 billion). Global equity funds contributed a further $2.66 billion, to take the total for pure long/short equity strategies to just under $10 billion for the year.
The assets raised by European long/short equity funds grew substantially in 2005 – by some 28%, from $5.66 billion in 2004 to $7.27 billion – reflecting the more buoyant underlying equity markets.
Emerging markets saw a very big rise – from $643 million in 2004 to $2.56 billion in 2005 – with most of the big new funds either taking a multi-asset-class approach or targeting local markets or emerging currencies, rather than equities.
The fixed-income, macro and multi-strategy sectors also showed strong growth in the assets raised, in all of these strategies the vast majority of assets were accounted for by a small number of big new funds.
The biggest drop was in credit – not surprisingly, in view of the sector’s problems in May and investors’ subsequent wariness of the sector – where new funds raised just $1.1 billion in 2005, down from over $3 billion in 2005.