UCITS hedge fund assets under management increased in Q1 from EUR113 billion to EUR120 biillion (+6.2%), according to Alix Capital’s latest quarterly research on the industry.
AUM has almost quadrupled in the last three years from just EUR32 billion in June 2009. Around 72% of the increase in Q1 2012 is due to investor inflows, and 28% is due to fund performance.
Alix’s report provides in-depth information on 764 single manager alternative UCITs funds and 76 alternative UCITs fund of funds, covering strategy breakdown, fund and advisor location, liquidity, asset flows, assets under management (AUM) and performance.
Louis Zanolin (pictured), CEO of Alix Capital, says: “The UCITS hedge funds industry has maintained its long term growth trend over the quarter and this will continue as investors increasingly require the transparency, liquidity and regulatory oversight that UCITS vehicles offer. Investors still want to allocate to alternatives in order to add alpha to their portfolios, but are looking for alternatives to offshore funds. We believe we will see a significant upswing in the popularity in UCITS hedge funds in coming years, and the regulatory environment will encourage more managers to launch UCITS products, enhancing the choice of products available to investors.”
The number of single manager funds was up +2.55% during the first quarter, and now stands at 764. This represents a 22.8% increase since March 2011, when there were 623 single manager funds. Fifty per cent of new launches were equity long/short funds, 15% equity market neutral, 10% macro and 10% volatility.
At the end of Q1 2012, the three largest asset managers in the alternative UCITS space were Standard Life Investments, followed by BNY Mellon and GAM. The total assets managed by these three firms were close to 30 billion EUR or 24% of the total assets managed in UCITS hedge funds. The 20 largest funds in the universe accounted for 46.3% of the total assets under management.
Fixed Income is the largest strategy in term of assets, accounting for EUR 36.4 billion or 32.3% of the total assets in single UCITS hedge funds. It is followed by Macro and Long/Short Equity with 15.84% and 15.20% respectively.
The UCITS hedge funds industry, as measured by the UAI Global index, delivered an average return of 2.25% over the quarter. With the exception of CTA (-0.99%), all strategies performed positively in the first quarter. The best performing sectors were emerging markets (+4.44%) followed by long/short equity (+2.49%) and event-driven (+2.17%).
Some 83.2% of UCITS hedge funds offer daily liquidity, with 16.3% offering weekly and 0.4% bi-monthly. Geographically, Luxemburg, France and Ireland are the three most important domiciles for UCITS hedge funds with market share at 46.2%, 18.5% and 17.7% respectively . Sixty seven per cent of new funds launched this year are domiciled in Luxembourg.