European Hedge Fund Industry Suffers From Lower Assets Due to Retail Investor Withdrawals

According to recent data from research provider Kepler Absolute Hedge, retail investors are withdrawing from Europe’s hedge fund industry due to lower asset under management, reaching an eight-year low. This trend can be attributed to higher interest rates and disappointing performance, causing smaller investors to seek better returns elsewhere. While UCITS funds, a type of fund sold in the EU that is heavily regulated, remain popular overall, with $12.9 trillion of assets at the end of 2022, many investors have become disillusioned with UCITS hedge funds, with Swiss private bank Julius Baer reportedly removing client funds from these types of funds. Private equity giant Blackstone also shut down its multi-strategy UCITS fund in November after experiencing a significant decrease in assets over four years. In contrast, some hedge fund strategies such as managed futures witnessed growth in the first quarter, although overall assets dropped by $7.6 billion from alternative UCITS funds during the same period, primarily affecting multi-strategy, macro-economic, and deals-focused funds.