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Hedge funds, always quick to take advantage of a crisis, have ramped up their offerings of Europe-focused investments this year to take advantage of perceived opportunities coming from the Brexit vote. It's a strategy that says as much about fund marketing as potential returns.

In the second quarter of this year, ahead of the June 23 referendum in which British voters opted to leave the European Union, research firm Preqin found 16 per cent of newly-launched hedge funds had an investment strategy that was focused on European investments. In the preceding quarter, just 1 per cent of new funds were Europe-focused.

"The run-up to and aftermath of the U.K.'s decision to leave the EU caused volatility across several markets within Europe and beyond," says Amy Bensted, London-based head of hedge fund products at Preqin, in a new report. "Hedge fund managers have seen increased opportunities to capitalize on this turbulence, and more European-focused hedge funds have been launched by managers both in and outside the region."

The pitch for these new funds almost writes itself. Legendary investors such as George Soros have made their names with canny wagers on volatile European currency markets.

More recently, the Leave campaign's unexpected triumph put British currency, credit and equity markets into a tailspin, translating into well-publicized wins for several hedge funds. (Funds that lost money betting on a Remain victory were less motivated to broadcast the news.) Asset managers will explain that no one can predict what the coming divorce between the U.K. and EU will mean for markets, and in that uncertainty lies the potential for profit.

This may be all true: Europe-focused strategies could yield outstanding results for some savvy fund managers in coming years.

But hedge fund managers are also rushing to launch Europe-focused funds because it gives them something to sell at a time when headwinds such as low interest rates and volatile equity markets have depressed returns and made it difficult to market new funds on past performance.

"Investors love a story. Europe is a story, while the real promise of hedge funds these days, to earn 3 per cent or 4 per cent returns, year after year, is not a good story," said one Canadian fund manager, whose company offers every flavour of European fund.

The idea that the hedge fund industry is looking for a "story" to improve its brand and add sizzle to marketing campaigns is backed by industry studies. Preqin recently surveyed 270 hedge fund mangers and found "the industry is facing increased pressure from investors on fees and transparency, while attempting to overcome a negative perception of the asset class that has arisen partly due to performance issues."

The firm's data shows that 750 new funds debuted last year and almost as many were wound down, due in part part to poor performance. Overall, there are approximately 15,000 hedge funds globally, with $3.2 trillion (U.S.) of assets.

Betting on Europe is a contrarian move, as hedge funds investing in the region underperformed North American and Asian-focused funds in the second quarter of 2016, according to Preqin.

However, Europe and the U.K. are deep, sophisticated and liquid markets, so virtually every type of hedge fund can find ways to put money to work. It's easy to think of opportunities to build long-short positions in stocks that capitalize on Brexit, or strategies that take advantage of currency and credit market volatility across the region.

Within Europe, the institutional investors that know the market best are expected to increase the amount of capital they put into hedge funds that focus on the region. A hedge fund manager from outside the continent that wants to sell to European investors needs to meet regulatory standards – known as UCITS compliance – to market its funds.

Preqin's data showed a record 18 per cent of new hedge funds launched in the second quarter by managers based outside Europe were UCITS complaint, which Ms. Bensted said "is a further sign of the growing interest that industry participants are taking in the region."

Market volatility as the U.K. exits the European Union may not translate into the head-turning profits that Mr. Soros turned back in 1992 when he took on the Bank of England and won – the gain on his trade was a rumoured $1-billion. But in the wake of Brexit, asset mangers see the potential to improve their fortunes by selling a bevy of new hedge funds.

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