For small and new hedge funds in Europe, 2015 has been a devastating year. Increasing costs as well as lower fees generated have forced some asset managers out of business and let to a decrease in the number of funds.
The number of hedge funds available to European investors has decreased from its all time high of 4023 funds at the end of 2014 to a number below 4000. Still, assets under management of European hedge funds have increased to a new high of 538 billion Dollar. Investors have invested another 33 billion Dollar during the first eleven moths of 2015. Much more than the 19.3 billion Dollar that have been invested in 2014.
During 2015, 294 european hedge funds have been closed. 75 percent of those were managing assets of 150 million Dollar or less, says Eurekahedge. Asset managers are suffering from an increase in costs due to the fulfilment of new regulatory rules such as AIFMD. In an environment of increasing costs, lower fees have put an end to some funds. Hedge fund managers could not impose the standard industry fee structure of a two and twenty percent but on average, where charging only 1.2 and 13.9 percent to European investors, say data from Eurekahedge.
Moreover, the number of freshly started hedge funds has decreased. In 2015, only 259 funds have been launched. According to Eurekahedge, the lowest number since 2002. While in Asia and North America, more funds have been launched than closed, it is the other way around in Europe. Peter Astleford, Partner at the law office Dechert, says on welt.de that official registrations for new asset managers at the Financial Conduction Authority have been relatively low in the past year. Expansion plans and new product developments of established asset managers have been discontinued due to new regulatory requirements.