European hedge fund launches rose by nearly 33 per cent to a record 330 last year raising $27.8 billion, according to data provider EuroHedg...

European hedge fund launches rose by nearly 33 per cent to a record 330 last year raising $27.8 billion, according to data provider EuroHedge.

The capital raising was concentrated at the top end. Six new funds raised more than $1 billion and an additional eight launches raised at least $500 million. In total, 55 funds raised at least $100 million each.

At least four of 2005's $1 billion-plus fund launches involved former proprietary traders at investment banks, confirming a long-standing trend in the industry and the importance of a strong track record when raising capital.

Significant launches during last year included Peloton Partners, founded by Ron Beller, who had been at Goldman Sachs, Fulcrum Asset Management's Semper Macro hedge fund, set up by former BBC chairman Gavyn Davies and two former Goldman Sachs colleagues, and NyLon Capital, run by Alan Burnell, former European head of government bond trading and fixed-income derivatives at Barclays Capital.

Hedge funds running long/short equity strategies were the most popular, accounting for one-third of the launches and one-quarter of the fundraising, at $7.3 billion, according to EuroHedge. They also posted gains of just over 11 per cent in euros and nearly 13 per cent in dollar terms in 2005, beating the 8.9 per cent return on EuroHedge's composite index.

Other strategies that attracted heavy capital last year included emerging markets, which took in $2.56 billion compared to $643 million in 2004, and multi-strategy funds, which raised $3.4 billion across 15 new vehicles, according to the EuroHedge data.