Brevan Howard is now the largest hedge fund manager in Europe, surpassing Man Group PLC (LON:EMG) (OTCMKTS:MNGPF) which was last year’s biggest manager and is this year’s number two, with $40 billion total assets under management according to a report from The Hedge Fund Journal listing the 50 largest European hedge funds. The top five is rounded out by BlueCrest Capital Management, BlackRock, Inc. (NYSE:BLK), and Winton Capital Management.
Brevan Howard's funds under management
Brevan Howard, which was founded by Alan Howard in 2002, has eleven different funds under management which also include two UCITS compliant funds. The firm's hedge funds include, the Brevan Howard Master Fund, an emerging market fund, a multi-strategy fund, a credit catalyst fund, and fund that specifically covers Asia. Man, which is the oldest company on the list having been founded in 1783, has $35.6 billion AuM and is run by CEO Manny Roman, CFO Jonathan Sorrell, and President Luke Ellis. The hedge funds use different strategies including managed futures, equity long/short, low volatility, arbitrage, and quant strategies.
According to the HFJ report, Europe’s top 50 hedge fund managers, most of which handle between one and five different hedge funds, have a total of $404.84 billion AuM, with an average of $8.1 billion and a median $5 billion. It takes at least $1.5 billion AuM just to make the cut.
Investor confidence in European hedge funds
European hedge funds, like their American counterparts, have had a rough year, but investor confidence in hedge funds has improved with long/short strategies being the most popular among investors with diversified, macro, and event driven strategies next in line. Distressed debt strategies have actually had the best year-to-date returns, but investors don’t think this will continue to be true as economic conditions continue to improve. Some hedge funds have also moved away from short strategies as the markets recover, though many of them are waiting for short opportunities to take advantage of high valuations and tight PE dispersion.
Despite their weak growth relative to underlying equity markets, European hedge funds have had strong inflows, and their AuM has shown healthy growth so far this year even when earnings have been flat. They will have to build on some recent successes to maintain investors’ interest through next year.
Note (12/16/2013): A previous version of this article incorrectly mentioned that Brevan Howard has five funds, the firm actually manages eleven funds.