Almost half of institutional investors considering Ucits funds i. Ucits III is attracting growing numbers of hedge fund managers and investors, according to a survey by Preqin. In February 2010 Preqin carried out a survey of 50 institutional investors to determine the current demand for Ucits-compliant hedge funds. Preqin also surveyed 60 fund of funds mangers to ascertain the present supply of Ucits funds in the hedge fund industry. The investor survey found that eight per cent of all institutional investors surveyed allocate capital to Ucits funds, and all are European-based. Thirty five per cent of institutional investors, including investors based outside Europe, are considering adding a Ucits vehicle to their hedge fund portfolio in 2010.
Four factors were most frequently listed by investors as the value added of Ucits: transparency (41 per cent), regulatory oversight (22 per cent), liquidity (22 per cent), and a strong risk management framework (11 per cent). Selectors set to put their faith in newcits funds | Fund Selecto. Leading fund selectors gathered for Citywire's Vienna forum today gave a strong vote of confidence to newcits strategies.
Electronic polling revealed that an overwhelming 85% expect to invest in a hedge-fund style Ucits III strategy over the next 12 months. With 5% of delegates undecided on whether to invest in newcits, just 10% gave a negative reply. Asked which equity sectors they were most positive about overall, 42% of the selector audience picked global emerging markets, followed by Japan which was favoured by 32%. Asia was third on 16%, with just 10% feeling positive on Europe and no-one at all expressing a positive view on the US or Eastern Europe.
Emerging markets were also the favourite category in the fixed income space, winning 49% of the vote. Opinion was divided on whether, in the wake of the Greek crisis, fears over sovereign debt will continue to weigh down on equity markets. Gartmore's Ben Wallace shows why Newcits can be compelling | Fun. The last 12 months have seen a wide number of groups launch hedge fund strategies under the Ucits III structure. After some poor performance there have been questions over whether these funds, dubbed Newcits, can be as successful as their hedge fund counterparts. However, during the past year, Gartmore’s Ben Wallace has proved the transition can be a compelling one. Such is his success, the fund has made it into Citywire Selection, which contains around 150 of our best investment ideas. Wallace brought a very impressive hedge fund record with him to the Newcits world.
In the severe volatility of 2008 his AlphaGen Octanis fund returned 29.43% versus the 31.1% decline in the FTSE 100. Interest in the fund grew in line with its performance but many wealth managers found it hard to access the $1.3 billion (£900 million) fund because of their stringent in-house rules on investing only in funds with regulatory approval. However, this has not hindered the performance of the Newcits fund. Hedge Fund Regulation Today's Post » UCITS and NEWCITS: A better. Convergence of traditional and hedge funds remains an emerging t. Despite having accelerated in the wake of the financial crisis, convergence between traditional asset managers and hedge fund managers remains an emerging trend, according to a paper by BNY Mellon and Greenwich Associates. Fifty two per cent of hedge funds and 46 per cent of traditional investment managers participating in the study report taking some steps in the direction of convergence.
However, only a very small number of investors currently use hedge fund managers for non-hedge strategies or traditional managers for hedge fund-like strategies. Managers do not universally acknowledge convergence as a trend. Some managers have offered cross-over products for more than a decade. According to the study, traditional and hedge fund managers alike underestimate the challenge at hand. Convergence success will require managers to develop new distribution capabilities, provide greater transparency, revise fee structures, and polish messaging about topics such as alpha and risk.
Newcits: the pitfalls and the advantages | Fund Selector | Cityw. 'Prove you can perform,' Aureo selectors tell newcits managers | Aureo Gestioni has tentacles stretching right across Italy and now has a plan to bring third-party funds to more than 400 different banks with a total of 4,000 branches. Already a major player in the multimanagement business through its fund of funds range, over the past year the group has been working to build a new service to allow retail investors buy directly into third-party funds. As the asset management company of the ICCREA group, Aureo is owned by the Banche di Credito Cooperativo, a network of local banks covering every part of the country.
While each bank is independent and can make its own investment selection decisions, in practice most have limited resources in this area and the Aureo multimanager team provides a well-established range of funds of funds that bank branches can rely on. In recent years the organisation has seen a growing demand from retail clients who want to do their own asset allocation, but still want guidance on which third-party funds to choose. Selectors show strong backing for new strategies | Fund Selector. Despite the reservations of some commentators, including some here at Citywire, fund selectors say the arrival of Ucits III hedge funds is a positive trend.
Of our monthly sample 88% were eagerly awaiting the arrival of these products, but as revealed in the comments below, a minority raised serious doubts. James Levy, Banco Inversis (above): 'I see it as a very positive trend for fund selectors. The best of these new funds allow us to build portfolios that more closely approach risk/return optimisation. 'I am particularly interested in market-neutral strategies taking long and short positions in sector ETFs, as well as global macro strategies capable of exploiting rapidly changing market sentiment concerning inflationary or deflationary global economic scenarios.' Peter Fitzgerald, Insinger de Beaufort: 'Many hedge fund managers have realised that Ucits III enables many hedge strategies to be offered in a regulated structure with good liquidity.
Santiago Montero, Banca March: Hedge Fund Industry Trends Today's Post » Bye-bye beta-driven op. According to the latest figures and accompanying analysis from Credit Suisse Tremont’s April Hedge Fund Index report (click here to download), hedgies are on fire, with collective returns of 3.1% in the first quarter, outperforming traditional equity and bond indices and moving them further towards recouping financial crisis-induced losses. As of the end of March, funds had earned back more than 90% of losses made in 2008, according to the results complied from the group’s analysis of more than 5,000 funds.
Those following event-driven strategies – profiting from things like merger and acquisition activity, bankruptcies and corporate restructurings – were the top performers, posting an average return of 4.8%. “As a result, we believe that manager returns are currently less driven by systematic or beta risks than they have been in the last five years,” the report said. Source: Credit Suisse Tremont. Gartmore's Ben Wallace shows why Newcits can be compelling | Pro. The last 12 months have seen a wide number of groups launch hedge fund strategies under the Ucits III structure. After some poor performance there have been questions over whether these funds, dubbed Newcits, can be as successful as their hedge fund counterparts. However, during the past year, Gartmore’s Ben Wallace has proved the transition can be a compelling one.
Such is his success, the fund has made it into Citywire Selection, which contains around 150 of our best investment ideas. Wallace brought a very impressive hedge fund record with him to the Newcits world. In the severe volatility of 2008 his AlphaGen Octanis fund returned 29.43% versus the 31.1% decline in the FTSE 100. Interest in the fund grew in line with its performance but many wealth managers found it hard to access the $1.3 billion (£900 million) fund because of their stringent in-house rules on investing only in funds with regulatory approval.
However, this has not hindered the performance of the Newcits fund. Why absolute return remains selectors' top priority | Fund Selec. UCITS III ‘Hedge Funds’ - The Hedge Fund Journal. Big mis-selling risk from hedge fund UCITS: Efama. Ucits structure could distort hedge fund strategies | Asset Advi. Structuring hedge fund strategies as Ucits will distort strategies and diminish returns, according to a survey by Edhec-Risk Institute. Many strategies would need to be altered to earn the Ucits label, and liquidity requirements would put the liquidity risk premium out of reach, the survey found. Sixty nine per cent of participants think that the “liquidity premium of hedge fund strategies will disappear and that performance will fall” when hedge fund strategies are structured as Ucits. The survey suggests that institutional investors bound by quantitative restrictions will ask fund managers and distributors to repackage hedge fund strategies as Ucits.
For instance, 62.5 per cent of insurance companies envisage asking promoters/managers to restructure hedge fund strategies as Ucits. For their part, managers of alternative funds are concerned by the uncertainties surrounding the directive on alternative investment fund managers and may consider packaging their strategies as Ucits. UCITS III for Hedge Fund Strategies: A Brief Guide. What are UCITS? UCITS are funds that comply with the European Directive for retail open-ended investment funds, are incorporated and authorised by the regulator in an EEA member state and can be distributed throughout the European Economic Area. UCITS is a framework to standardise rules for the authorisation, supervision, structure and activities of collective investment undertakings in the EEA and so to enable them to be marketed throughout the EEA.
To be UCITS a fund must be open-ended, liquid, well-diversified, invest only in certain 'eligible' assets (namely quoted securities, money market instruments, deposits, certain derivatives and units in other UCITS) and can only employ limited leverage. Why would a hedge fund manager offer a UCITS version of their fund?
Managers who are able to offer their strategies in UCITS format will be able to access a large universe of investors attracted by the UCITS brand in Europe, globally, and particularly in the Asia. Fund Structures: Sponsors: General: Absolute Return. Hedge Fund Regulation Today's Post » Hedge funds: Wrap it up UCI. Putting absolute return funds to the test | Money | The Observer. Absolute return funds, which aim to make money for investors in rising and falling markets, are enjoying a flurry of activity. Half of the 20 funds in the sector have been around for less than a year, three have been launched in the past month - by SVM, Gartmore and Argonaut - while Pictet has said it is planning one and a number of other fund managers are considering joining the fray.
There are three key reasons for the flood of launches. First, managers have only recently been allowed to use techniques such as shorting in retail funds. Second, with stock markets down 40% in the past year and some pundits predicting further falls, it makes sense to launch a fund that claims to be able to make money for its investors even when share prices are falling. Third, there is evidence from companies such as BlackRock - whose UK Absolute Alpha fund was one of the best-selling retail funds last year - that there is retail interest in buying these products.
So should you join them? Small Investors Embrace Hedge Fund-Like Strategies - BusinessWee. (Corrects affiliation of fund manager Christopher Zuehlsdorff in 19th paragraph.) With the economic recovery recently turning bumpy, investors have grown wary of downside risk in their investment portfolios and are increasingly willing to give up some returns in exchange for protection from those risks.
Volatility spiked in May, as concerns about European sovereign debt and a bigger-than-anticipated slowdown in China's economy shook the market's confidence. More than nine months into an economic recovery, you would expect investors to be reaching for high returns, but that's not the case, says Jeff Cusack, president of Forward Funds, who's seeing much greater interest in risk control.
The traditional approach to modern portfolio theory, which focuses on diversified asset allocation and portfolio manager selection, is being challenged as never before, he says. Tactical allocation portfolios aim to make money for investors in both up and down markets. A Minimum stake of $1,000.