Investors backed a record number of new European hedge funds last year as new and existing managers raised almost $40bn (€30bn) for more than 400 new funds.

The total of 423 new funds launched in 2006 compared with 330 in 2005, according to EuroHedge, a hedge fund industry magazine. The amount raised, $37.8bn, was more than a third higher than the $27.8bn raised for new funds in 2005.