ITALY – The absence of specialist on-shore knowledge in Italy’s hedge fund industry has dampened down the market for competition, according to a report by global hedge fund trade association AIMA and international law firm Simmons and Simmons.

There is a “need for specialist skills across the range of strategies”, said the report, which highlights some of the problems of the domestic Italian market and suggests how the industry can plan for the future, said AIMA (the Alternative Investment Management Association).

According to the survey, “Companies note the lack of ‘quality’ newcomers to the Italian marketplace in terms of expertise. This inevitably limits competition in the market.

“The increase of onshore ability and skills would, in fact, enable the increase in interest from foreign markets which in turn would promote the entry of new independent managers.”

Italy’s hedge fund industry is also suffering an “imbalance” with hedge funds occupying just 3% of the market and funds of hedge funds, which have 97% of the market, the survey stated.

Other key finding include:
- The need for the domestic hedge fund industry to become more focused on international markets;
- The risk-averse local market and some legal difficulties act as a brake on the entrepreneurial business;
- The need to change the general description of funds from ‘Fondi Speculativi’ (speculative funds) to one, which reflects the risk management nature of hedge funds.

However, the report also stated that Italy’s hedge fund market was well regulated and stable, and that it makes up 5% of the European total.

Commenting on the report, AIMA director Emma Mugridge said: “Italy has been one of the pioneers of the European hedge fund industry and it has created a structure that meets investor transparency and regulatory need.

“This survey has identified some of the issues that it now needs to address before it can move on with its market development. None of these findings are impossible to address and we hope this survey will act as a stimulus for renewed dialogue and, ultimately, change and future development.”

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