German family offices pile into hedge funds

Date: Friday, December 10, 2010
Author: Fabian Fuchs, CityWire

A survey has revealed the popularity of hedge funds among various investor groups in Germany and Austria, with family offices shown to be the keenest buyers.

The survey of 400 professional investors was conducted by Man Investments and fund distributor apano. 

The respondents were made up of 30 family offices, 102 investors with a wholesale background (fund of fund managers, wealth managers, private banks and investment consultants), 159 independent financial advisers (IFAs) and 123 advisers from co-operative banks.

The result, which was revealed in website Fondsprofessionell, was that family offices allocate an average of 53% of their investments to hedge funds.

The wholesale investors had 26%, IFAs had 21% and advisers from the co-operative banks were bottom of the pile with just 11%.

The German public is generally thought to be suspicious of the hedge fund industry, but the results show that hedge funds are more widely accepted among professional investors than their reputation among the German public would suggest.

The family offices and wholesale investors are even expecting to increase their allocation to the area in the next three years but demand an even broader range of interesting products to do so.

However risk considerations have led to a growing preference for hedge products within a Ucits III framework, meaning Germany could be a profitable hunting ground for distributors of Newcits funds. 

However, advisers are more reluctant to invest in hedge strategies, believing they lack the necessary experience to successfully select such products. They see such strategies as risky and so still prefer to invest in funds of funds.