The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

More slices, but how big’s the pie?

The switch in hedge fund strategies away from equities has brought new competition to prime brokerage. But what does it amount to in terms of bottom lines?

INCREASED COMPETITION AMONG banks and the changing strategies of new hedge funds are transforming the prime brokerage business. Banks have piled into prime brokerage over the last few years and new entrants have been particularly keen to establish themselves by catering to the fast growing - though less profitable - segment of non-equity hedge-fund strategies.

This is starting to eat into the Morgan Stanley-Goldman Sachs global duopoly - challenged only in the US by Bear Stearns. There are now nearly 30 prime brokers in the US, and in Europe there are 15, compared with nine as recently as 1999. Morgan Stanley, Goldman Sachs and Bear Stearns still collectively manage most hedge-fund assets, but their share of mandates for new funds is slipping.

A February 2003 survey by Eurohedge shows that the change is most pronounced in Europe, where Morgan Stanley's and Goldman's share of new mandates has fallen over the past year, from 60% of the 149 funds launched in 2001 to just over 50% of the 181 funds launched in 2002. Morgan Stanley, though still the largest prime broker overall, has slipped the most, winning just 36 new mandates in Europe last year compared with Goldman's 60.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree