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October 2, 2006
Germany Aims To Boost German Hedge Fund Market
Germany plans to give the country's hedge fund sector more freedom in a bid to remove competitive disadvantages to international rivals and boost innovation and growth at home, according to the Finance Ministry.
Among key changes are plans to allow insurance and pension funds to invest more in hedge funds and to free hedge funds from having to appoint deposit banks, according to Deputy Finance Minister Thomas Mirow.
The ministry plans to redraft its Investment Act.
"It is important that the German hedge fund market continues to develop, even though it is clear that the Anglo-Saxon financial centers will in all likelihood remain dominant in this field," said Mirow at a speech to hedge fund managers late Wednesday.
"Despite this dominance, we should concentrate our efforts into securing an ever growing slice of the hedge-fund cake."
The ministry plans to allow German funds to assume internationally accepted structures.
"The German deposit bank model is not readily compatible with the normal international hedge fund structures. As a result, we plan to drop the legal requirement to appoint a deposit bank where it can be ensured that a suitable third party can evaluate the fund's assets," said Mirow.
"And finally, investment rules are to be amended so that institutional investors, in particular, can invest more in alternative asset classes so that they, like foreign insurance funds and pension funds, will be able to generate sufficient returns."
The planned amendments come as Germany's hedge fund market has so far failed to live up to expectations since Germany allowed hedge funds to sell to investors in January 2004.
According to the Finance Ministry, there were only 44 hedge funds operating under German law and managing a total of roughly EUR2.3 billion as by May 2006 while the market had been expected to reach around EUR10 billion in its first year.
"It would appear that this market is still in its infancy," Mirow said.
The ministry's efforts come as Germany is also pushing for more transparency of hedge funds.
-Dow Jones-
Posted by su at October 2, 2006 12:06 PM