Perhaps the most surprising thing about the nature of the hedge fund market in Europe is its lack of concentration. This is partly because it is made up of a variety of distinct buying groups (fund-of-funds, family offices, financial institutions, private banks, etc) and partly due to the sheer number of participants. In the long-only equity industry perhaps 90% of the money is managed by the top eight big global names. In the alternatives sector, we estimate that in London alone there are up to 200 individual organisations with an interest in Asia hedge funds. Geneva has a similar number of hedge fund investors; and then there are Zurich, Paris and the other capital cities of Europe.

Some of these have perhaps US$10m in Asia or are looking to put their first $10m into Asia and are marginal players. However, the industry is much more flat-tailed than others in the financial services industry. There are some big players such as the Swiss banks, which on the surface account for material chunks of investments being made. However, it is quite common for such institutions to have underneath their umbrellas a variety of separate entities looking at hedge funds for different categories of investors with different investment criteria. The fact that many of the buyers - such as family offices - are deliberately secretive also makes the market more opaque then it could be.

Not only is the market widely populated, but it is also rapidly changing. We estimate that the number of participants will grow by a third in the next year - partly by new fund-of-funds being formed and partly by established players starting to look at Asia for the first time. We estimate that as many as a third of the existing players are launching new products that have a relevance to Asia. On top of this there is a fair degree of staff turnover arising mainly from a need to build up research capabilities and staff new products.

So what does this mean for an Asia-based hedge fund marketing itself in Europe? The trends mitigate against the hedge fund where marketing means one of the partners spending a week on the road once a year - perhaps 3 days in London, and 2 in Geneva on the way to their annual holiday in Tuscany. We are observing that the funds raising money are the ones making as many as 4 trips a year, which often means one of the partners or senior staff being largely dedicated to the marketing function. Alternatively, systematic use of email lists to send out data, follow-up telephone calls and conference calls can be effective.