Hedge funds: Retail investors eye up the gain in Spain
According to a report by Aite Group, Spain’s fund of hedge funds market is taking off following legislation allowing retail investors to put money into the asset class. Spanish investors with more than €50,000 in disposable assets can invest in hedge funds, although it is expected that funds of hedge funds will be the preferred route. Hedge fund managers should be positioning themselves to capture the new influx of capital from the investor base.
In November 2005, Madrid passed the "summer law", approved in spring 2006, which laid down the final rules of selling and marketing hedge funds in the country. The regulation has opened up the hedge fund industry to retail investors, who are being attracted to the asset class for diversification reasons. Around 70% of Spain’s retail assets are held in cash products or guaranteed products.
The Aite report says it is still too early for long-only managers to develop or buy up hedge fund management teams, but funds of hedge funds in Spain will begin to attract retail inflows. Phillip Silitschanu, author of the report and director of European research at Aite Group, says the effects of the regulation are already beginning to be noticed.