A survey of 270 fund managers conducted by Preqin in early June finds that Europe-based hedge fund managers agree on their predictions for the outcome of the 23 June referendum, believing that UK will vote to remain in the European Union.
Seventy-nine per cent of managers in both the UK and the rest of Europe believe Britons will vote to remain in the EU, while 14 per cent of managers in both regions think they will opt to leave. However, European managers differ on their perception of the impact that a British exit from the EU would have; 59 per cent of UK-based firms believe that an exit would have some level of negative impact on the global hedge fund industry, while in the rest of Europe 35 per cent of managers believe Britain leaving would have negative consequences. In contrast, almost twice as many European managers (31 per cent) as UK-based managers (17 per cent) think a British exit from the EU would have a positive effect on the hedge fund industry.
With the EU referendum debate impacting European markets it is unsurprising that the performance of hedge funds based in the region has been affected; 48 per cent of UK-based managers, and 41 per cent of other Europe-based managers stated that their performance had been affected by the debate in the first half of 2016. Elsewhere, the debate has had less impact on hedge fund performance; 85 per cent of fund managers in North America stated that they had seen no effect on fund performance as a result of the referendum, and the majority (58 per cent) foresee no long-term impact to the industry if Britain were to leave the bloc.
Despite the Preqin All-Strategies Hedge Fund benchmark currently returning 1.55 per cent for 2016 so far, both UK- and EU-based funds have recorded YTD losses of -0.22 per cent and -0.46 per cent respectively. In 2015, UK-based funds outperformed their EU counterparts, making gains of 3.01 per cent compared to 1.24 per cent for funds based in other EU countries.
A total of 600 of the 954 EU-based fund managers are based in the UK. The AUM of UK-based fund managers total USD472 billion, whereas the assets held in other EU countries stand at a combined USD138 billion.
The majority of institutional investors active in hedge funds within the EU are UK based. 403 of the 745 investors based in the EU are headquartered in the UK. Similarly, 1,603 of the 2,456 hedge fund vehicles within the EU are managed by UK firms.
Between 2010 and 2015, the majority of fund inceptions in the EU have been UK based; in 2015 nearly three-quarters (74 per cent) of all EU hedge fund launches occurred in the UK, with 121 funds launched in the country, compared to 43 funds incepted across the rest of the EU.
“As the date of the EU referendum regarding Britain’s membership of the EU draws near, Preqin has polled hedge fund managers globally to find out more about their predictions for the outcome of the vote,” says Amy Bensted (pictured), Head of Hedge Fund Products, Preqin. “The consensus globally is that Britons will choose to remain part of the EU; and within the UK nearly 80 per cent of fund managers believe that the “Remain” camp will win out.
“The impact of the debate on hedge fund performance has been most significant for those funds within Europe; around a third of fund managers in the UK and the rest of Europe believe it has negatively impacted their performance in the first half of 2016. The outlook on the potential impact of a vote to leave is mixed between regions; 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.”
