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Italy's Momentum Continues

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MILAN, Italy (–Italy’s hedge fund industry continued to show robust growth in early 2006, in stark contrast to the fund management industry in general, according to research recently released by Assogestioni, the Italian fund managers’ association. Hedge funds notched up a 361 million euro (US$440 million) increase in February, continuing January gains and bringing this year’s total rise to 485 million euro, or 3.49 %. According to the research, the hedge fund industry has grown by 38% in the 12-month period.

But for fund management as a whole it hasn’t been an auspicious start to the year. Total assets under management shrank by more than 919 million euro (US$1.1 billion) in February, bringing the year’s retreat to more than 2.12 billion euro (US$2.6 billion), according to the association.

Flexible funds–which differ from balanced funds in that the prospectus establishes fixed limits for bond or equities investments–are on a tear, with gains of almost 6 billion euro (US$7.3 billion), or almost 28%, since the start of the year, and 77% year-on-year. Equities and balanced funds also made net gains of 704 million euro (US$858 million) and 1.62 billion euro (US$2 billion) since the start of the year. Notably, the gains in equities were concentrated among funds specializing in emerging markets, which have racked up gains of 967 million euro (US$1.2 billion), or more than 10%.

However, bond and money market funds suffered heavy net redemptions: funds under management in bond funds have declined by 5.94 billion euro (US$7.24 billion), or about 2%, since the start of the year, while 4.93 billion euro (US$6 billion), or 5.6%, has fled from cash, mainly attributable to the perception that the robust trends in equities markets may continue.

Contact Bob Keane with questions or comments at [email protected].