Lyxor Asset Management operates the largest commingled hedge fund managed account platform (MAP), but over the last couple of years it has made inroads to build out a similar offering in the UCITS space.
The Lyxor Alternative UCITS platform has seen its stable of funds grow to nine in total – six external single manager funds, two internal single manager funds and one internal multi-manager fund. Through May 2015, the platform had a combined AUM of EUR1.6 billion.
At the end of 2014, Capricorn Capital Partners launched the Lyxor/Capricorn GEM Strategy Fund – a global emerging markets long/short strategy. Then, in March 2015, the Lyxor/Corsair Capital Fund, a US long/short equity strategy, became the first to offer daily liquidity on the Lyxor platform.
The latest fund, which launched 19th June, is the Lyxor/Chenavari Credit Fund, a long/short credit fund with a European focus.
"Over the last 12 months we've looked to add funds in strategies that were under-represented in the overall UCITS investment universe to offer diversification benefits that investors won't find elsewhere," explains Daniele Spada (pictured), Head of Lyxor MAP in Paris. "Our strategy is one of quality not quantity. The funds we select are based on what we think could work effectively in the current macro market environment and into which investors will want to allocate."
This is all part of Lyxor's long-term strategy to offer global investors the opportunity to invest in multiple fund structures that best suit their needs; these could be traditional hedge funds, onshore AIFMD regulated funds or alternative UCITS. All three are important areas but Spada confirms that a great deal of focus is going into expanding its UCITS managed account fund range.
"It is a strong area of growth but we are also working to offer our investors AIFMD-compliant funds. We launched our first AIFMD-compliant CTA manager – Quantmetrics Capital – at the end of 2014 and we are preparing to launch another two funds," confirms Spada, stating that both the UCITS and AIFMD platforms are complementary to its hedge fund MAP.
"With respect to UCITS, it allows us to enlarge our investor base. Some institutions are happy investing in our traditional MAP but others are finding out more about the UCITS funds we offer. These are strategies that are of interest to large institutions," adds Spada.
"We are looking for best-in-class investment managers in strategies that we favour in the UCITS space," notes Spada. "We have to make sure that the manager and the strategy we are considering have the characteristics to perform well in a UCITS environment. We don't want to force a manager to modify their strategy too much in a way that would hinder their investment edge. That's why the recent additions are managers that were not previously on our Lyxor MAP."
The Lyxor Alternative UCITS platform is undoubtedly going to be an important growth driver moving forward as investors – both private banking clients and large institutions – look to add alternative strategies into their portfolio mix.
But as Spada notes in conclusion, it's not just investors who are driving demand:
"Managers who were previously reluctant are speaking with us to discuss the possibility of co-launching and co-distributing a UCITS vehicle on our platform. They realise that they can target a new investor base through a UCITS version of their programme."
