At the end of December , foreign advisors were assisting in the management of Sgr Sgr 8. Sgr 7. Sgr 6. Sgr 2. Sgr 1. Sgr 0. Sgr Alt. Figure 3. With regard to investors in Italian hedge funds, high net worth individuals continue to represent the most important clients in the alternative sector, with However, it is also true that according to a survey conducted by the MondoHedge Research Department the weight of the private sector is declining compared with 12 months ago, because it is being eroded by the growth sustained by institutional investors, which now account for up to It is logical to expect the amount of seed money - funds provided by the shareholders of the alternative SGR to start up a business - to fall considering that these days the majority of players have left the start-up phase.
Within the span of 12 months, seed money has slipped from 5. The number of subscribers per SGR is also changing. The smallest company in terms of subscribers has barely more than 10 clients while the largest operator has over 2, The average number of subscribers per alternative manager is The Products Hedge fund investments accounted for 3.
During the fourth quarter of , the assets of Italian FoFs grew from Eur Meanwhile, single manager hedge funds continue to represent the smallest part of the industry, with 10 products and a market share of 2. Two new speculative real estate funds were launched in the Italian hedge funds industry and represent a share of 1. Outlook The number of speculative SGR is still growing.
Yet another new SGR is also likely to receive authorisation soon. It is also important to note that started off with the arrival of many innovative products. The Italian SGR decided to take advantage of all the nuances of the current industry regulations.
As a result, the first speculative real estate funds and the first products using coupons were born. However, let us start at the beginning by analysing the new products introduced as a result of recent provisions from the Bank of Italy. In addition, they do not have a minimum investment amount such as the Italian speculative funds do the minimum investment threshold is Eur, Speculative real estate funds Finanziaria Internazionale Finint was the first company to launch an Italian alternative real estate fund with its Giudecca fund.
The advantage here is to be able to create funds with profiles specialising in diverse asset classes, thanks to the possibility for speculative funds to waive leverage and concentration limits that applay to traditional real estate funds.
Finint AI SGR is planning a series of funds with diverse specialisations and active types of funds that will allow them to significantly diversify their range of investments for clients. However, now Finint will have to compete with Pirelli Re Opportunities SGR, controlled by Pirelli SGR, which will promote, create and manage closed opportunistic speculative real estate funds that are reserved for qualified domestic and foreign investors.
The company is starting the new SGR at the same time that it is launching its first alternative product, the Spazio Industriale fund. This fund specializes in real estate for industrial, logistic and artisan use. Presidio SGR manages the first Italian closed hedge funds specialised in mezzanine investments and intermediate capital investments that can be used in acquisitions, consolidations and strategic development for small to medium sized companies operating in the Italian market.
In private equity transactions, mezzanine financing is useful for satisfying the demands of institutional investors and shareholders to maximise the efficiency of financial leverage without later resorting to senior debt. The flexibility of the product makes it particularly attractive for leveraged buy-out transactions, industrial or financial reorganisations.
Speculative funds with coupon Hedge Invest Total Return, the fund of hedge funds with annual distributions of a portion of the proceeds, is one of the most interesting new products this year. The objective is to annually distribute the share of performance that exceeds the Italian inflation rate to allow investors to benefit from both the revaluation of the capital that remains allocated in the fund and the liquidity corresponding to the portion of the accrued capital gains using the annual coupon without needing to make a redemption request.
Homepage Hedge funds in Italy: An update. Figure 2. This is done in order to create the largest return with the least amount of risk. There is a very good reason why those working in hedge fund investing, such as a hedge fund manager, are paid handsomely. Aside from just the big gains that can be made on such investments, these individuals are extremely experienced and knowledgeable in matters of financial investment; thus when you invest in hedge funds you are getting expert advice as to not only which hedge funds to use, but when anticipated market fluctuations and where domestic versus international , which can easily ensure you a greater chance of receiving a large return on your investment.
One major disadvantage of hedge funds, and a highly criticized one as well, is the often high fees one must pay in order to invest in hedge funds. For example, hedge fund investors typically charge both a performance fee on top of a management fee. Performance fees are mainly used to motivate managers to create as big of a profit as they can. Another disadvantage to hedge funds is the use of the statistical tool known as the standard deviation. This is a very common tool used to anticipate the risk in investing in a particular hedge fund.
So, the standard deviation measures the volatility of possible gains, expressed as a certain percentage per year. The statistic can provide a good measure of potential variation in gains during the year, however the downside is that the standard deviation cannot indicate the overall big picture of the risk of return; mainly because hedge funds do not operate under a bell-curve, or normally-distributed rate of return.
The downside capture is a risk management measure used to assess what level of correlation a hedge fund has to a specific market when that particular market is on the decline.
The smaller the downside capture measure of a fund, the better equipped the hedge fund is to handle a market decline. However, the disadvantage is that all funds are compared to a unified benchmark for the market. So, if a hedge fund manager uses a wildly different style of investing than the benchmark, the downside capture ratio may, for example, show that the fund is under-performing the benchmark, even if the market index generates high returns.
The disadvantage to this measure is related to the disadvantage that the standard deviation has with a hedge fund, mainly that hedge funds do not operate very consistently and predictably in order for the standard deviation, and thus the drawdown, to be very useful.
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