Europe-based institutional investors account for 22% of hedge fund investors tracked worldwide on Preqin’s Hedge Fund Investor Profiles online database. This represents 1,032 investor profiles with details on the investor type, location, current fund searches and open mandates, as well as current and target allocation to hedge funds, background information and investment plan overviews.
Proportionally, Europe-based investors make up the second largest group of hedge fund allocators by region after North America (which account for 65% of the industry). As a result, Europe-based investors are an important source of capital for hedge fund managers. One investor in this space is APG - All Pensions Group, an asset manager based in the Netherlands that allocates around €16.5bn to the asset class. On average, this group of Europe-based investors have been allocating capital to hedge funds for 12 years, indicating a wealth of experience and knowledge.
Private pension funds make up the largest proportion of investors from this group, accounting for 35% of the top 100, demonstrating the confidence this investor type has in the asset class. Asset managers also make up a proportion of the top 100 allocators (15%), suggesting that this investor type can see the appeal of hedge funds being able to offer their clients absolute returns against market volatility and risk-adjusted returns through unique strategies. Furthermore, insurance companies (13%), public pension funds (13%) and wealth managers (11%) also feature in the top 100 largest hedge fund allocators in Europe, illustrating the appeal of the asset class to a diverse group of investor types.
The UK is home to the greatest number of large allocators featuring in the top 100, with 38 institutions based in the country. Switzerland follows with 24 of the top 100, while the Netherlands (12) and Germany (7) are also well represented. In terms of cities, London (23) is by far the most important hub for this group of Europe-based investors; Zurich (8) and Geneva (6) are also significant centres.
The sheer size of some types of institutional investors, such as pension funds and asset managers, means that we have seen greater amounts of capital being allocated to hedge funds as part of their overall alternative investment strategy. Given the large amounts of capital flowing in from Europe’s top hedge fund investors, we can expect to see significant activity in the region over the coming year.