After North America, Europe is the second largest hedge fund market in the world. While in recent years North America has seen an increase in the number of new fund manager launches, data from Preqin’s Hedge Fund Analyst online service shows that Europe has not experienced the same upward trend. Data gathered for the 2014 Preqin Global Hedge Fund Report shows that the number of Europe-based start-ups fell from 61 in 2011 to 55 in 2013. Some of this slowdown in launches can be attributed to the AIFMD regulation within Europe, which has led to some prospective managers delaying launching a new firm. However, one country within Europe shows no signs of sluggishness - the UK.
With almost as many fund managers as the rest of Europe combined, the UK dominates the European hedge fund landscape. According to Preqin data, 578 fund managers are based in the UK, compared to 619 located in the rest of Europe. Switzerland is the second largest European hub, with 210 fund managers located there, followed by France with 71 and Sweden with 49. The Netherlands rounds up the top 5 locations with 37 fund managers. Unsurprisingly, London is the heart of the UK hedge fund industry, with almost 91% of fund managers located in the capital.
Unlike Europe as a whole, there has been a marked increase in the number of managers setting up in London. According to Preqin data, from 2007 to 2013 the number of firms launched in London each year more than doubled from 16 to 34. Indeed, 2013 has been the most prolific year to date in terms of firm launches. Although the number of new firms had previously never reached 30 in any one year prior to 2010, in each of the last 3 years, over 30 new managers have launched in London, highlighting the ongoing strength and resilience of the UK hedge fund industry.
In addition to boasting the largest volume of fund managers, the UK also eclipses other European countries in terms of assets under management, with around $423bn. One thing to note is that in January 2013, UK fund manager assets stood at around $406bn. Considering that $40bn of this was relocated to Jersey when Brevan Howard moved from London in October, UK fund managers are clearly still enjoying significant capital inflows – a net increase in assets of around $57bn between January 2013 and April 2014 when the departure of Brevan Howard from its shores is taken into account. As expected, with $380bn, London-based managers hold a significant chunk of total UK assets. Of those countries with more than 5 fund managers, Sweden has the second highest assets under management figure in Europe with $33.9bn. Swiss fund managers have a total of around $30.8bn, followed by France with $19.6bn and The Netherlands with $9bn. Interestingly, although Sweden has less than a third of the manager base of Switzerland, Swedish managers have more assets under management than their Swiss counterparts. This highlights the varying levels of assets concentrated among fund managers.
Ultimately, Europe is experiencing somewhat of a slowdown in terms of new fund manager launches. The UK has the most fund managers and the most assets under management in Europe and in contrast with the continent overall, new fund manager growth remains strong, with London acting as the nucleus for the UK hedge fund industry. It will be interesting to see whether the UK continues to see increasing volumes of new manager launches in 2014 and if regulatory hurdles continue to hinder start-ups in the rest of Europe.