German hedge funds fail to appeal

Recruiters say the closure of Germany's Lion global opportunity fund is likely to discourage people from working in the country's nascent hedge fund sector.

"The German hedge fund industry has a bad reputation," says Hans Christian Froehlich, a consultant at Frankfurt-based recruitment firm Von Pfetten & Kollegen. "People are unwilling to work there because it is considered too high risk."

News that the €250m (172m) Lion global opportunity fund is to close at the end of this month is likely to raise the perception of risk a notch or two higher. The fund is one of Germany's largest single-manager hedge funds, and is closing following the withdrawal of funds by its main investor, HVB.

"Hedge fund failures mean professionals moving to hedge funds are going to be looking for even higher salaries to compensate for the risk," says Froehlich. "They wouldn't say so in public, but it's what they're telling us."