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UCITS attracting hedge fund managers looking for institutional investors


With recent reports and individual commentators suggesting that US pension fund allocations into alternative investment vehicles will rise from their current three per cent position to 10 per cent over the coming years, it shouldn’t come as too much of a shock to hear that traditional hedgies are turning their attentions to UCITS. Hedgefunds Review writes this week that over the last 18 months, the growth in absolute return funds being rolled out by heavyweight asset management houses or hedge funds has rocketed. In part because of hedge funds jumping on the UCITS bandwagon as they begin to realise that developing an onshore presence will attract more diverse investors and therefore much needed assets; but also because of the ever-growing demand from investors for non-benchmark-related, regulated investment vehicles. So suggests a recent report by Moody’s (“European Absolute-Return Funds: A Convergence of Two Worlds”). For hedge fund managers, UCITS opens up a previously inaccessible investor audience, and wider distribution potential. Whilst for institutional investors, UCITS suddenly provides them with investment strategies that were previously off-piste: win-win. Factor in their desire to move away from index-linked funds, and one can start see why the traditional and alternative worlds are slowly converging in on the newcits universe of absolute returns.   

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