James Williams, Hedgeweek

Long/short equity UCITS funds continue to attract investor mandates… UCITS gain 0.53 per cent in May…

The UCITS Alternative Index Global gained 0.53 per cent in May, putting it at +2.34 per cent for the year. The UCITS Alternative Index Funds of Funds enjoyed a fifth consecutive month of positive returns with a 0.65 per cent performance, up 2.25 per cent for the year.

All but two strategies enjoyed gains for May: the UAI Long/Short Equity generated its second-largest gains this year with 1.53 per cent and is the best YTD performer at 4.77 per cent. The second best performing index in May was the UAI Event-Driven, up 1.07 per cent (YTD 1.84 per cent). The UAI Multi-Strategy gained 0.40 per cent in May, making it the third best monthly performing index. With a decline of -1.36 per cent in May, the UAI CTA looses most of its April gains (up 1.81 per cent). The UAI CTA is nonetheless the second best YTD performer with gains of 2.71 per cent, outperforming the UAI Multi-Strategy's performance of 2.65 per cent

European Parliament lawmakers will delay voting on rules to reign in and cap UCITS fund manager bonuses as they continue to deliberate over the details reported the Irish Times this week. Legislators are weighing up plans to change legislation that would effectively ban managers of UCITS funds from receiving bonuses in excess of their annual salary and crack down on performance fees. Sven Giegold, the European Parliament’s lead lawmaker on the dossier was quoted in an email as saying: “We are trying to figure out if a pro-European and cross-party compromise for waterproof consumer-protection rules in the area of managers’ remuneration and performance fee regulations can be found.
 
“I asked for the postponement of the debate and vote of the UCITS V dossier in plenary in order to continue political negotiations.”
 
UCITS managers have good reason to feel aggrieved by these bonus-cap plans as they go further than the plans to curb EU bankers’ pay, which will allow bonuses of twice their annual salary.  Giegold said that the assembly would settle its stance on the draft law by this August’s recess.
 
Dodge & Cox announced this week that Dodge & Cox Worldwide Funds plc – an Ireland-domiciled UCITS – was recently added to three investment platforms: Cofunds Ltd., Novia Financial plc, and Nucleus Financial Group. All three are online wrap providers that provide comprehensive investment management services for investment advisers and their clients.
 
The Dodge & Cox Worldwide Funds – which are already available through the Raymond James and Ascentric platforms as well as directly through the firm’s own website – consists of three UCITS funds. These include: Global Stock Fund, International Stock Fund, and US Stock Fund. All three funds mirror the investment strategies of US-based Dodge & Cox funds and leverage off of the same investment philosophy; long-term investment horizon, low valuation, strict price discipline, and thorough independent research of individual holdings.
 
Charles Pohl, Chairman and Chief Investment Officer of Dodge & Cox, commented: “We are excited to be included as an option on the Cofunds, Novia and Nucleus platforms as we continue to build our UCITS business.” Founded in 1930, Dodge & Cox manages over USD203billion for individual and institutional investors in mutual funds, UCITS funds and private accounts, as of 30 April 2013.
 
Despite being a small component of the overall hedge fund industry, UCITS funds accounted for 14 per cent of all hedge fund mandates in Q1 2013, wrote Preqin’s Graham Terry in a blog this week. Part of the reason for this uptick in popularity, particularly among long/short UCITS funds, is that they’ve outperformed their offshore brethren this year suggests Terry, who notes that cumulative returns are +4.91 per cent, compared to +4.65 per cent, as of 30 April 2013 (based on Preqin data). This is sure to provide encouragement to investors, who have taken their time to warm to these regulated funds, particularly from a performance perspective.
 
As Terry wrote in the blog: “Long/short equity remains the most common strategy targeted by UCITS hedge fund investors over the coming 12 months, with 50 per cent of all current mandates among UCITS investors including a long/short equity component.” He also noted that long/short credit is popular, with 19 per cent of UCITS hedge fund investors seeking exposure to this strategy.
 
If UCITS hedge funds can continue to build their performance track record and keep pace with their offshore equivalents, the depth and popularity of these funds in Europe will likely increase over the coming years.  

Further reading



Upcoming events

4 weeks 5 days from now - Hong Kong
4 weeks 5 days from now - Ulaanbaatar
4 weeks 6 days from now - Dublin
5 weeks 4 days from now - California
5 weeks 4 days from now - California

Upcoming training

Sun, 24/08/2014 (All day) - Dubai
Wed, 10/09/2014 (All day) - London
Mon, 29/09/2014 (All day) - London