London's hedge funds have made a miserable start to 2014 and will face further pressure once controversial new rules from Brussels are introduced later this year, experts warned today.
Returns from UK hedge funds were just 0.56% in the first four months of 2014, according to data seen by the Evening Standard, compared with 5.19% over the 12 months to the end of April.
Market volatility and political uncertainty in areas like Ukraine have hit the sector, making it the worst start to a year since 2008 when the world of finance went into freefall following the collapse of Lehman Brothers.
US hedge funds have fared much better, figures from data specialist Preqin show, returning 2.14% in the first third of this year and 11.33% over the 12 months.
The results come ahead of Europe’s alternative Investment Fund Managers Directive, which is aimed at improving transparency.
However, critics say it has cost millions in red tape and also places unfair restrictions on hedge fund managers’ pay.
“This is not a good time for them to perform badly with the burden of regulation continuing to grow and costs of doing business increasing,” said Dan Roman, head of UK hedge funds at KPMG. “If performances continue to suffer, then there is likely to be pressure on fees and inflows of institutional money could even slow down.”
However, assets held by UK hedge fund bosses grew about $57 billion (£34 billion) between January 2013 and April 2014, Preqin said.
