Fashion may have a high turnaround in Italy, but legislation is sluggish. Although the Italian parliament finally passed a new law allowing the launch of onshore hedge funds in 1999, it has taken until this year for the Banca d'Italia to license the first asset management companies set up to run these kinds of products, and to approve the prospectuses of the first funds of hedge funds. It will be early next year before Italy could see a single-manager hedge funds launch.

To avoid the delay, some, like Unicredito, had already set up business abroad. Alberto La Rocca, chief executive of Pioneer Alternative Investment Management, the company's alternative investment arm, says: 'We are the first Italian bank to have set up a hedge fund operation, but we had to do it abroad.'