New Hedge Funds Defy Market Slump

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Byline: Anuj Gangahar in Geneva

A rash of new hedge funds have launched in Europe over the past few weeks despite the continuing spate of fund closures and the prospect of greater consolidation in the sector.West Asset Management, Lehman Brothers and Julius Baer are the latest firms to launch hedge funds. These follow launches over the past few weeks by BGI, Global Asset Management, Martin Currie, HSBC and Maestro. West AM this week is set to launch a new absolute return fund focusing on fixed income and currency markets.

The fund will be run by Nigel Jenkins and Moe Daniel. Returns generated by the fund are expected to be relatively uncorrelated with traditional asset classes. The firm also plans to launch a multi-strategy hedge fund before year end.

Lehman Brothers, until now a peripheral player in the hedge fund market, is also boosting its efforts with the launch of a global opportunities hedge fund. The fund will target annualised returns of 10% to 15%, with risk of 7% to 10%.

Julius Baer Asset Management is planning to launch an in-house hedge fund with $3.2bn ([euro]3.2bn) under management. The firm's push into the alternative investments arena will be spearheaded by William Marr, formerly head of foreign exchange sales at AIG, the insurance group.

According to figures from Goldman Sachs prime brokerage, 59 new hedge funds have been set up in Europe over the year to date. This compares with 49 last year and 22 in 2000. Goldman has seen 10% of its European hedge fund clients close this year, with senior management predicting further closures to come. RMF, part of the Man Group, is thought to have suffered losses due to its exposure to Witherow Capital.

Despite the surge in the number of start-ups by traditional asset managers, many smaller funds are facing up to the prospect of closure or being bought by larger players. …