James Williams, Hedgeweek

AXA Investment Managers launches implied volatility fund… VAM Funds opens its platform to retail and institutional investment managers…

Geneva-based Alix Capital, provider of the UCITS Alternatives Index, this week published its latest UCITS Alternative Index Trends survey. The survey found that 38 per cent of respondent believe that investment consultants are “behind the curve” when it comes to advising their clients on UCITS-compliant hedge funds.

And in a sign that suggests improved risk appetite for 2013, the survey found that for the first time since the summer of 2011, respondents plan to increase their allocation to equity long/short strategies, and reduce their holdings in fixed income; some 48 per cent plan on increasing their equity long/short strategy exposure, with emerging markets and event-driven strategies the next most popular, garnering 35 per cent of the vote.

Overall, the survey found that 69 per cent of respondents plan to increase their allocation to UCITS hedge funds in 2013. Private banks are expected to be the main buyers of funds, followed by pension funds. However, over half of respondents said that performance needs to improve for institutional investors to increase their allocation.

Discussing the latest survey results, Alix Capital CEO, Louis Zanolin, said:
“While the majority of institutional investors understand the advantages that UCITS hedge funds can offer them… there are still many improvements that need to be made to improve the perception of UCITS as a competitive framework. Providers need to enhance communications with the investment consultant community to improve their understanding and awareness of the UCITS alternative space.

“UCITS hedge funds assets have experienced steady growth, increasing by 16.4 per cent in 2012 to reach a new high of EUR143billion, and respondents expect this trend to continue in 2013.”

VAM Funds is to offer its UCITS IV platform to retail and institutional investment managers
reported International Adviser this week. The platform, which includes marketing and third party administration services, would, said the Luxembourg-based firm, help smaller fund managers cope with rising regulatory and administration demands, as well as help widen their distribution capabilities. Brendan Adams, VAM’s Global Fund development consultant, was quoted as saying: “At VAM we have already made the investment not only in our UCITS IV platform but in developing a strong distribution network. We have the capacity to take on more funds and the associated marketing and administration that this entails. Having recognised that many other organisations would benefit from our in-house services, these are now being made available to them.”

AXA Investment Managers this week announced the launch of a new product to provide investors with positive exposure to the implied volatility
across major equity markets. The AXA WF Equity Volatility fund is to be lead managed by Laurent Ramsamy. The idea of the strategy is to capture significant increases in equity volatility in the European and/or US equity markets. This is to be achieved by building a long position in implied volatility (one of the inputs used when pricing options) of the S&P 500 index and/or the Euro Stoxx 50 index. To mitigate the costs of the long position, the fund also has the flexibility to opportunistically build short positions (if implied volatility is expected to fall) over the near-term through the use of index futures.

Ramsamy said: "Volatility, if managed dynamically, is not a mere measure of risk, it is also an attractive source of diversification and performance, especially for investors exposed to riskier assets. The challenge, however, is how to provide the long term long volatility exposure in a cost efficient manner. The strategy is designed to offer timely protection and strong gains when equity markets move into crisis mode."

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