According to a new report by DataMonitor, 'Hedge Funds in Europe 2008', the European hedge fund market is going through a period of growth but the extent of the mortgage-backed security crisis is still uncertain.
The report forecasts strong growth in funds of hedge funds over the next year, with less demand for single hedge funds according to 65% of asset managers in Europe.
Asset managers in Spain and Italy believe most strongly that the demand for funds of hedge funds will outstrip that for single hedge funds, followed by France, Germany and finally the UK.
Across the five core economies in Western Europe - France, Germany, Italy, Spain and the UK - institutional investors now dominate the market for hedge funds. On average, slightly more than two-thirds of asset managers confirmed that this group represents their biggest customer segment for hedge funds today.
40% of asset managers in Italy say mass market investors may also be put off by the price of hedge fund investment. In Spain, on the other hand, demand from mass market clients is being limited by competition from capital-protected and structured products and inadequate promotion of hedge fund products by banks and advisers.
DataMonitor, a provider of online database and analysis services for key industry sectors, has put out the report presenting views on the market for hedge fund investment based on a survey of 100 leading asset managers across Europe.
Covering mass market, high net worth and institutional customer groups, 'Hedge Funds in Europe 2008' is part of a series of reports looking at the market for alternative investments in Europe.