Survey: Four-Fifths of European Hedge Fund Managers Believe Britain will 'Remain'

Jun 16 2016 | 5:27pm ET

With perhaps a keener sense of the economic risks involved, a new study by alternative investment industry data provider Preqin reveals nearly 80% of European hedge fund managers believe Britain will vote to remain in the European Union when it holds a referendum on the so-called Brexit on June 23.

The poll of 270 fund managers was conducted by Preqin earlier this month. Fully 79% percent of managers in both the UK and the rest of Europe believe Britons will vote to remain in the EU, while 14% of managers in both regions think they will opt to leave. 

Notably, the Preqin survey also showed that European managers differ on how much impact an Brexit would have, with 59% of UK-based firms believing it would have some level of negative impact on the global hedge fund industry, while in the rest of Europe, only 35% of managers felt that way. 

In contrast, almost twice as many European managers (31%) as UK-based managers (17%) think a British exit from the EU would have a positive effect on the hedge fund industry. 

Unsurprisingly, the performance of hedge funds based in the region has been affected by the Brexit debate. 48% of UK-based managers, and 41% of other Europe-based managers, said their performance had been affected by the debate in the first half of 2016. In contrast, 85% of North American fund managers stated they’ve seen zero effect on fund performance as a result of the referendum, and 58% anticipate no long-term impact to the industry if Britain were to leave the European economic bloc. 

Other key facts on the UK and EU hedge fund industries contained in Preqin’s report: 

  • Fund Performance: Despite the Preqin All-Strategies Hedge Fund benchmark currently returning 1.55% for 2016 so far, both UK- and EU-based funds have recorded YTD losses of -0.22% and -0.46% respectively. 
  • In 2015, UK-based funds outperformed their EU counterparts, making gains of 3.01% compared to 1.24% for funds based in other EU countries.
  • 600 of the 954 EU-based fund managers are based in the UK. The AUM of UK-based fund managers total $472 billion, compared to combined assets held in other EU countries of $138 billion. 

  • The majority of institutional investors active in EU-domiciled hedge funds are in the UK. 403 of the 745 investors based in the EU are headquartered there.
  • Fund Launches: Between 2010 and 2015, the majority of fund inceptions in the EU have been UK-based; last year, 74% of all launches in the EU occurred in the UK.

“As the date of the EU referendum draws near, the consensus globally is that Britons will choose to remain part of the EU, and within the UK, nearly 80% of fund managers believe that the “Remain” camp will win out,” said Amy Bensted, head of hedge fund products for Preqin. “Perhaps unsurprisingly, UK-based managers see the greatest potential for a negative impact on the industry should the British people decide to leave the Union.” 

Founded in 2003, Preqin is a leading source of information for the alternative assets industry, providing data and analysis via online databases, publications and bespoke data requests. More than 40,000 professionals in 90 nations use the company’s products.  

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