Europe 50 (2008)


Originally published in the March 2008 issue

Welcome to the third snapshot of the top 50 European hedge fund managers, ranked by assets under management as at 31 January 2008. Once again, The Hedge Fund Journal (THFJ) has compiled its industry list, wherever possible sourcing figures directly from the firms themselves.

If there could be said to be an emerging trend represented in this list, it is that of increasing asset share by the leading fund names. It is a trend often remarked on by consultants and analysts.

The recognised names are also those firms with the resources to invest in the infrastructure and processes which institutional investors are seeking from their fund managers. They are also the names which are able to diversify into new strategies, making the hires to allow them to offer customers more than one approach. Frequently, these names are part of even larger institutions, Barclays Global Investors and Gartmore being two immediate examples in the top 10, but there are others on this list which will no doubt continue to succeed on the basis of the additional credibility this brings them in turbulent times.

This kind of scale and gravitas within the institutional investor community nets rewards, and we have seen the total assets under management by Europe50 firms rise over the calendar year of 2007, to $366 billion.

In addition, the cut-off point for inclusion has increased considerably. At the beginning of 2007, the 50th-ranked firm was Boyer Allan Investment Management, which reported $1.6 billion in assets under management at the end of 2006. This year it is Adelphi, with $2.28 billion. A net gain of almost a billion dollars in assets under management for the smallest firm on the list, over a period which was partly characterised by a major onset in market turbulence, and a rapid drying-up of liquidity in global markets, is an indication of the important role hedge funds still have to play in the asset management market.

Established names stay on top
Since last year there have been some major changes in the ranking, but the larger names have remained in the top slots. GLG Partners is now the biggest hedge fund manager in Europe by assets under management, closely followed by Man Investments, Brevan Howard, Barclays Global Investors, and Lansdowne Partners.

A turbulent six months in the second half of the year has seen its casualties too. Certainly, Peloton is one of the most high profile, but some other major fund managers which were in the top half of this list last year, no longer appear. But with the losers, there have been winners too, firms that have grown quicker than others in a business which has been garnering new assets rapidly in 2007. One worth noting in particular is David Harding’s Winton Capital. Ranked 17th last year with $7.41 billion, it is now in the top 10, with over $12 billion.

These firms continue to demonstrate remarkable growth. GLG Partners, for example, which reported in excess of $23 billion under management at the beginning of this year, was ranked second last year with $17.9 billion. In May 2006 it reported assets in hedge fund strategies of slightly more than $15 billion. It is this kind of clear, consistent growth coupled with the ability to deliver additional capacity and performance, parallel to solid infrastructure, which will distinguish those firms that lead the Europe50 rankings.

Other big asset gatherers include Cevian, a major new entrant last year, which has climbed 16 places, and now has over $5 billion under management. THFJ profiled Cevian’s Christer Gardell and Lars Forberg in its December issue last year, and mentioned the quality of the firm’s investor base, which has been driving them to new heights in our ranking. Horseman, ranked 43rd in 2007, and founded by former GAM manager John Horseman as well as colleagues Christopher Harrison and Mark Driver, has managed to ascend to 33rd position. And John Armitage’s Egerton has also done well, climbing from 25th place to 16th.

With a list of this sort, we are always welcoming new entrants. Amongst the more notable additions are Adelphi, Altima, Boussard & Gavaudan, Capula, and Montrica. In particular, we say hello to Jabre Capital, founded by ex-GLG principal Philippe Jabre in Geneva in late 2006, and now ranked at number 32 in the list.

As with previous Europe50 lists, THFJ has focused on those firms which can be recognised as distinctly European businesses, usually those where the executive functions and head office are located in Europe. In some cases, the European subsidiaries of larger, global asset management operations can still qualify on the strength of the money being managed out of their European offices. The key criterion in these latter instances is where the assets are being managed from, not where they are located. Thus, a US long/short fund being managed out of London would still count towards to the total.

Where the executive function is located in Europe, THFJ has, for the sake of convenience, included all the assets managed by that group, regardless of where the portfolio manager is sitting. Where the executive function is outside Europe, it has just counted the assets managed by European-based portfolio management teams. In cases where groups manage both hedge fund and non-hedge assets, THFJ has tried wherever possible to strip out the non-hedge component of the asset base.

The reader will notice that THFJ has been forced in some cases to simply provide estimates of the money being managed by a firm, and hopes that this will be enough to reflect their relative standing in the rankings. Wherever possible, THFJ has sought to obtain an AuM figure for the end of January this year, but where this has not been disclosed, an estimate has been provided, sometimes compiled from more than one independent source.

One significant omission from last year is Cantillon, which has insisted that it should now be classed as a US-based manager, not a European one. Given that figures are based on the AuM figure disclosed as at 31 January of this year, Peloton Partners, which announced in March that it would liquidate its business, is included near the bottom of this list.

Alongside the assets under management figures, THFJ has also asked firms to list their top five strategies by assets under management, along with the portfolio managers responsible for them. The names of the founders and/or principals at the firm are also included.

We at Newedge would like to conclude by congratulating all those firms on this list, and wishing them all the best for the year ahead. Although market turbulence and uncertainty continue, it is gratifying to see so many established names with real global presence congregated at the top of this ranking, and we look forwards to seeing some of the newer entrants making their mark in the future.

To download the full rankings, please click here