The EurekaHedge Report is a monthly investor newsletter discussing all things hedge fund. The April 2014 edition of the EurekaHedge Report included an in-depth article on European hedge fund trends for 2014.

Hedge Fund 1

Euro hedge fund overview

The report highlights the fact that things went pretty well for European hedge funds in 2013, despite a volatile market environment. Current Euro hedge fund assets under management (AUM) total US$461.71 billion spread among 3,988 hedge funds. The European hedge fund industry’s share of Global AUM was 24.9% in 2007 and stands at 22.7% as of Q1 2014. Furthermore, the Eurekahedge European Hedge Fund Index is up a solid 8.39% year-over-year, with the AUM of Euro hedge funds increasing by US$83.5 billion during the same period.

Strong asset inflows

Another point of note was that European hedge funds have enjoyed strong asset inflows for over a year. According to the report, February 2014 represents the 15th consecutive month of asset inflows for Euro funds, with the net flow over the 15 months adding up to US$68.9 billion.

The report offers a brief summary of Euro fund asset flow trends: “Since the second half of 2012, European hedge funds have enjoyed a period of sustained growth that has expanded their total asset base 29.3% during this 20 month period. Strong asset inflows and performance-based gains have both ensured a steady rise in the region’s AUM.”

Growth in number of funds

Hedge fund 2

The total number of European hedge funds has been trending up, with significantly more new fund launches than closures in both 2012 and 2013. The worm might be beginning to turn, however, as first quarter of 2014 has only seen fractionally more new fund launches than existing fund closures.

One trend of note is that although their has been a recent spurt in new launches, the number of long-short equities Euro hedge funds has been steadily shrinking since 2008. CTA/managed futures is one of the sectors showing the most steady growth since 2008, with around 420 new funds launched versus 210 or so funds closed over that six year period.