Key Takeaways
- • European alternatives industry assets under management reached a record EUR1.48 trillion as of September 2017, approaching the EUR1.50 trillion milestone cited in industry tracking.
- • Europe-focused private capital funds (private equity, private debt, real estate, and real assets) secured EUR184 billion in fundraising during 2017, with annual inflows increasing every year since 2011.
- • Hedge funds demonstrated strong capital attraction, with 52 percent of Europe-based managers recording net inflows in 2017—the highest proportion of any global region—totaling EUR27 billion in net capital inflows.
- • Europe-focused hedge funds delivered average annualized returns of 6.33 percent over five years to March 2018, substantially outperforming the FTSE 100's 1.94 percent return; private capital funds achieved 14.7 percent average returns, exceeding both North American (13.1 percent) and Asia-focused (12.5 percent) funds.
- • The European alternatives ecosystem comprises over 5,700 fund management firms and 2,800 institutional investors managing investments across private capital and hedge funds.
Summary
The European alternatives industry has reached a critical inflection point, with total assets under management climbing to EUR1.48 trillion as of September 2017, according to research from Amundi and Preqin. This milestone underscores the sector's sustained expansion and growing institutional relevance across the continent's investment landscape.
Capital formation has been the primary driver of this growth trajectory. Europe-focused private capital funds—encompassing private equity, private debt, real estate, and real assets—attracted a record EUR184 billion in 2017 alone, continuing an unbroken pattern of year-over-year fundraising increases dating back to 2011. Concurrently, the hedge fund segment demonstrated remarkable resilience, with 52 percent of Europe-based hedge fund managers capturing net inflows during 2017, representing the highest proportion globally and generating EUR27 billion in aggregate capital inflows.
Performance fundamentals have substantially supported this capital attraction. Europe-focused hedge funds delivered average annualized returns of 6.33 percent over the five-year period ending March 2018, eclipsing the FTSE 100's 1.94 percent return by a significant margin. Private capital funds demonstrated even more compelling results, posting 14.7 percent average annualized returns over five years to September 2017, outperforming both North American funds at 13.1 percent and Asia-focused funds at 12.5 percent. These performance differentials have provided institutional investors with compelling evidence for allocations to European alternatives.
The ecosystem supporting this growth spans considerable scale and diversity. Over 5,700 fund management firms and 2,800 institutional investors now oversee European alternative assets, reflecting both the maturation of established markets and the emergence of new investment opportunities across the continent's mixed economic landscape. This breadth of participants and capital sources positions European alternatives for continued expansion, though Mark O'Hare, Chief Executive of Preqin, notes that the region's complexity—encompassing both developed and emerging economies alongside evolving regulatory frameworks—requires careful strategic navigation.
Capital formation has been the primary driver of this growth trajectory. Europe-focused private capital funds—encompassing private equity, private debt, real estate, and real assets—attracted a record EUR184 billion in 2017 alone, continuing an unbroken pattern of year-over-year fundraising increases dating back to 2011. Concurrently, the hedge fund segment demonstrated remarkable resilience, with 52 percent of Europe-based hedge fund managers capturing net inflows during 2017, representing the highest proportion globally and generating EUR27 billion in aggregate capital inflows.
Performance fundamentals have substantially supported this capital attraction. Europe-focused hedge funds delivered average annualized returns of 6.33 percent over the five-year period ending March 2018, eclipsing the FTSE 100's 1.94 percent return by a significant margin. Private capital funds demonstrated even more compelling results, posting 14.7 percent average annualized returns over five years to September 2017, outperforming both North American funds at 13.1 percent and Asia-focused funds at 12.5 percent. These performance differentials have provided institutional investors with compelling evidence for allocations to European alternatives.
The ecosystem supporting this growth spans considerable scale and diversity. Over 5,700 fund management firms and 2,800 institutional investors now oversee European alternative assets, reflecting both the maturation of established markets and the emergence of new investment opportunities across the continent's mixed economic landscape. This breadth of participants and capital sources positions European alternatives for continued expansion, though Mark O'Hare, Chief Executive of Preqin, notes that the region's complexity—encompassing both developed and emerging economies alongside evolving regulatory frameworks—requires careful strategic navigation.
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