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Alternative Market Briefing

370 hedge funds shut down in Europe in 2014

Tuesday, February 17, 2015

Komfie Manalo, Opalesque Asia:

European-focused hedge funds are closing down at a record pace because of rising cost, declining profits and waning number of new investment leads, data from Eurekahedge showed.

A report by the Irish Times cited data from Eurekahedge which showed that four in every 10 hedge funds that closed shop last year were in Europe. Some 370 hedge funds shut down in Europe in 2014, the report said. Europe is also home to large number of smaller hedge funds.

The number of hedge funds closures in Europe rose even as Eurkeahedge’s European funds index gained 0.74% last year, way below the 5.5% returns recorded by their North American counterparts. European-focused hedge funds recorded an eight consecutive years of underperformance.

Amongst the big institutional investors that ditched their hedge fund portfolios because of poor earnings were Dutch pension fund PMT and Britain’s Local Pensions Fund Authority.

Also adding to the cost of operating a hedge fund in Europe is the implementation of the Alternative Investment Fund Managers Directive. Peter Astleford, partner at law firm Dechert, was quoted as saying, "The pendulum towards more onerous rules in the U.S. has stopped swinging. There is, at best, only very limited evidence of this in Europe."

In the first half of 2014 alone, over 400 funds ......................

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