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European fund-of-funds growth levels off – report

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EUROPE – Growth in the fund-of-funds market in continental Europe has “levelled off”, according to a report from Cerulli Associates.

“Growth among continental European funds of funds, a traditional engine of growth, levelled off somewhat, as investors throughout the region continued to shy away from equity-objective funds,” Cerulli said.

It added that the global multi-manager market rose by 66 billion dollars, or 28%, to almost 680 billion dollars at the end of 2003. Most of the growth remained in the US and UK.

“Funds of funds accounted for 343 billion dollars of the total, while retail manager-of-managers funds held 220 billion dollars and institutional manager-of-managers products comprised 114 billion dollars.”

Cerulli said it expects multi-manager assets to maintain a 14% compound annual growth rate of 14% up to 2008.

“Far from being a fad, multi-management products continue to benefit from long-term growth catalysts present in the industry, including increased outsourcing from key fund distributors and a growing demand for advice.”

And the report said that interest in traditional long-only products at least matched, if not exceeded, that of funds of hedge funds “despite the hype”.

Its “most aggressive” estimate for net new business in the fund-of-hedge-funds market worldwide during 2003 is about 65 billion dollars. It said it is “difficult to say anything decisive about opaque hedge funds”.

‘Global Multimanager Products 2004’ is the Boston-based consulting firm’s third annual survey of multi-manager asset management products in 10 domiciles.

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