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IPE special report May 2018

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German hedge fund market seen doubling

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GERMANY - Hedge funds in Germany are set to double from an investment of currently €15bn to €30bn euros by 2007, the SuperHedge conference was told today.

This should put Germany among those countries enjoying the quickest growth in Europe, said Christian Edelmann of Mercer Oliver Wyman, which has just launched a study of the German market for hedge funds

But Germany was starting from a low level with France standing at twice the German figure and the UK at three times. But when the figures were corrected for the overall size of the German market the ratio comes down to twice, he said.

The €30bn figure takes into account the fact that German institutional investors are more conservative than other continental institutions.

The ultimate market potential would be much higher, Edelmann said. With insurance companies able to invest up to 5% off their assets this provided a potential of €50bn with a further €20bn from the whole of the pensions marketplace, he added.

The charity and endowment marketplace, which was key in other countries such as the US, contains few large players in Germany and had limited potential for hedge funds.

But large corporates are frequently overlooked, he said. “If you are only to take from the largest 150 German companies, 20% of their financial assets which are not required for credit issues, this gave a total potential of €80bn.”

Matthias Erb of Swiss Capital Group, commenting on these figures, said he was somewhat shocked at the “pessimistic potential capacity” in the market. He felt there was a “huge highway” for approaches such as using as certificates. “The figure should be more than €30bn by 2007 otherwise it would not be worthwhile for groups such as Deutsche Bank or UBS to be involved in this business.”

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