Dexia Asset Management, running single manager and funds of hedge funds, is mainly known in continental Europe where most of its investors are based. In total it manages around €86 billion.

Dexia Asset Management, known mainly as one of the larger alternative players based in Paris, currently has assets under management in its alternatives division of around €5.5 billion (nearly $8 billion).

The range covers mainly single strategy hedge funds as well as a couple of funds of hedge funds. “We are very diversified with 15 different strategies, 13 of which are directly managed by Dexia fund managers and two that are funds of hedge funds,” explained Fabrice Cuchet, head of alternatives and hedge funds at Dexia Asset Management.

According to Cuchet the most popular strategy at present is arbitrage. “One very famous strategy is risk-arbitrage driven where we are gathering a lot of assets,” he said, adding he expected long/short emerging debt, arbitrage and currencies to offer good opportunities to investors this year. These strategies, he said, offer diversity and are uncorrelated to traditional long only, equity or bonds.

One characteristic that sets Dexia apart is its approach to regulated funds. Since launching its first hedge fund in 1996, it has only offered investors onshore regulated structures.

“I think that today many investors are looking for regulated vehicles and to be able to show them a long trade record is positive,” he noted.

Cuchet believes these regulated structures coupled with a stable team and consistent performance over time “is a key advantage when we are meeting with our investors who are looking for regulated products to diversify their portfolio in an environment with very low interest rates, with a lot of uncertainties on equities and lack of diversification in assets”.

While positive on regulation, Cuchet was critical of inconsistent and unpredictable legislative changes that could adverse impact strategies and business models.

“Regulation is positive if you have clarity and stability. We are in favour of regulation but it must be stable and you must have clarity. The risk is if regulators are changing the rules overnight. This creates instability and can be very dangerous for hedge fund managers because you can’t build and adapt your strategies, your business model within a stable environment.”

Although Dexia AM has not yet managed to retain the level of AUM it had pre-financial crisis, Cuchet is somewhat optimistic about increasing capital inflows this year.

“It’s never easy to raise assets,” he noted. “I think the underlying factors to support the industry are here. A lot of the assets are going to large funds and the winners take all. This will last but you have to deliver, you have to be consistent. So I don’t think it will be easier [in future to raise assets]. It will be tough. We have to fight very fierce competition but if you are delivering consistently you will be able to raise assets,” concluded Cuchet.