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News about a slowly developing German hedge fund market are dominating the media. But is this the real truth? Absolut Research, the leading hedge fund research company in Germany and publisher of the Absolutreport, put together the most recent information about the hedge fund market in Germany. Result: Within the last 3 years Hedge Funds are facing a growing demand in Germany, predominantly from institutional investors. In this short research paper we will present some surprising figures about the German hedge fund market, the demand of institutional investors and the developments in recent years.

The first hedge funds for the German retail market were issued as structured products (certificates) in 1999. After the new investment act (Investmentmodernisierungsgesetz), which became effective in January 2004, the first regulated onshore hedge funds were launched in Germany. After an increase in assets under management to more than 2.7 billion Euros, the onshore-industry dropped back to 1.9 billion Euros at the end of 2007. Some investment companies closed their hedge funds again, others experienced outflows and still do. But there are also some exceptions, especially with smaller companies whose hedge funds have shown a good performance and hence see capital inflows. 19 single hedge funds and 20 funds of hedge funds still existed in Germany at the end of December 2007.

The number of hedge fund certificates has climbed to about 240 at the end ......................

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