A Comparison of the European and U.S. Funds of Hedge Funds Industries

Abstract

This article empirically investigates regional differences in the performance of funds of hedge funds (FHFs). It uses descriptive variables and time series for 533 FHFs from the Lipper TASS Hedge Fund Database and segregates them into regional peer groups. The article shows that fees are generally higher in Europe than in the U.S., that redemption periods are longer in the U.S. than in Europe, and that assets under management tend to be higher in Europe. Additionally, we find that European-based FHFs exhibit a stronger home bias than their U.S. counterparts and that U.S.-based FHFs appear to invest more heavily in emerging hedge fund managers.