Invesco Global, the European and Asian arm of Invesco Asset Management with USD56 billion under management, may launch its first long/short equity fund in the coming months, which would use exchange-traded and over-the-counter equity derivatives. "To raise new money in this environment you have to have something a little different, which is why we are looking at this now," said Angus Pottinger, product manager in London. The U.S. arm, with USD304 billion under management, currently runs long/short equity funds but this would be the first for Invesco Global, which mostly sells funds to U.K. residents in sterling-denominated accounts, Pottinger said. He declined further comment regarding how large the fund would be and what factors Invesco is considering.
Pottinger said retail hedge funds have not yet taken off in Europe adding that Invesco wants to take advantage of the depressed equity markets with a hedge fund strategy. "It's not difficult to make a case for absolute return strategies" given equity markets' performances in recent years, he said.
Analysts said the European hedge fund market, which has traditionally lagged the growth of that in the U.S., is beginning to pick up but is still growing at a slow pace. "In the U.S. you already have the second generation of hedge fund managers, but in Europe people are coming from a long only background and often don't have extensive knowledge of sophisticated risk management techniques like in the U.S.," said Alexander Ineichen, head of equity derivatives research at UBS Warburg in London.