EFAMA released a report on the evolving investment strategies of UCITS this week as the popularity in “newcits” – UCITS funds that employ hedge-like strategies to achieve ab
EFAMA released a report on the evolving investment strategies of UCITS this week as the popularity in “newcits” – UCITS funds that employ hedge-like strategies to achieve absolute returns – grows month by month. The report acknowledged that the global trend of increasing investor demand for these alternative UCITS products has risen substantially since the financial crisis, part of which is driven by the need for capital security; not to mention the enhanced transparency and liquidity provided under the UCITS umbrella. But it seems EFAMA is unhappy at the continued use of the term “newcits” in the media when talking about such strategies. After setting up a working group, EFAMA found that the current UCITS legislation “provides a robust framework with strong retail investor protection” and that “newcits” are neither products nor a new category of funds”. Rather, they’re a logical extension of the UCITS framework.
Clearly, EFAMA is not a fan of the moniker first coined by Citywire and is keen to protect the integrity of the UCITS brand worldwide. “The “Newcits” label was coined by the media and should not be adopted by the industry or regulators,” said Peter De Proft (pictured), Director General of EFAMA. “We do not believe that it is necessary or beneficial to have a specific label for these funds. The universe of UCITS is evolving but this is encompassed by the UCITS regulatory framework.” In response, Citywire this week wrote that its readers disagreed. They felt it was beneficial to distinguish between traditional, long only UCITS funds and hedge-fund like strategies such as managed futures, equity l/s and global macro funds. The battle of conceptual semantics rumbles on.
