A new study produced by HedgeFund Intelligence has found that the returns generated by onshore UCITS are broadly in line with their offshore hedge fund equivalents.
A new study produced by HedgeFund Intelligence has found that the returns generated by onshore UCITS are broadly in line with their offshore hedge fund equivalents. A conclusion that will surely be well received by fund managers and investors following the unfortunate decision by BlueCrest to shut down its BlueTrend UCITS due to an unexpected widening of the tracking error. A total of 62 hedge funds were analysed in conjunction their onshore offerings, the average tracking error between them coming out at 3.38 per cent. To put it into context, BlueTrend’s tracking error had widened to 3.5 per cent end-September. The study would suggest that this particular case does not reflect the overall trend being seen in the newcits universe. For example, the study found that equity strategies came out on top with respect to tracking error margins; 2.94 per cent. This implies equity-focused funds make a good fit for the UCITS wrapper. Global macro, fixed income and futures strategies had the highest margins; 4.12 per cent. Arbitrage, event-driven, credit and multi-strategy funds had an average tracking error margin of 3.45 per cent. The study revealed that only four of the 62 funds came out with a tracking error greater than 10 per cent. An encouraging 36 funds had a tracking error of less than 3 per cent, of which 14 deviated less than 1 per cent from their offshore peers. On a monthly performance basis, however, the study found that, compared to offshore funds, nearly half of all UCITS were underperforming.
