Mar 2010:
Hedge funds are expected to relocate in the wake of some high-profile financial scandals which have investors demanding greater liquidity and less counterparty risk.
This has persuaded some hedge funds to move onshore to European cities, although impending taxes could drive most of the migration to Switzerland as reported here.
One financial jurisdiction which has drawn interest from hedge fund managers is Luxembourg. The benefits of moving to Luxembourg include a multi-lingual workforce (primarily Luxembourgish, French and German), superb fund services, extensive investor protection and adequate regulation.
"It's more the Madoff effect than the legislation effect, funds now want to come onshore, not be dependent on the offshore market," said Martin Kloeck, a director at Zurich-based fund manager Signina Capital, which manages $600 million.
"Asset managers get the Luxembourg-regulated tag, so why wait to see what new laws might tell us to do?" said Kloeck, whose company is already moving funds to Luxembourg from Cayman.
It is already drawing funds from offshore centres as major asset managers like Brevan Howard and Marshall Wace register eligible funds onshore in regulated structures like UCITS III or Specialised Investment Fund (SIF) to broaden European appeal.
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