More than half the inflows into UCITS hedge funds (56 per cent, EUR13.2billion) went into fixed income strategies during 2012 according to the latest quarterly European research paper published by Alix Capital, provider of the UCITS Alternative Index.
The second most popular strategy proved to be macro, attracting 24.7 per cent (EUR5.8billion) of inflows. 2012 saw total assets under management for UCITS hedge funds increase by an impressive 20 per cent to a new high of EUR140billion. The research found that the three largest single strategy managers saw their AUM increase significantly: Standard Life Investments’ AUM climbed 59.8 per cent to EUR17.4billion, GAM climbed 41.2 per cent to EUR12.5billion and M&G’s AUM doubled to EUR10.8billion.
Commenting on the latest research Louis Zanolin, CEO of Alix Capital, said: “Fixed income was the most popular strategy and I believe this was not only money shifting from other strategies in the hedge fund space, but from long only products as well. Investors wanting exposure to fixed income are looking to absolute return funds in order to limit their risk exposure. Traditional offshore investors are also looking to UCITS vehicles for increased liquidity and to meet new regulatory constraints.” The three largest fixed income managers, currently, by AUM, are: M&G (EUR10.8billion), PIMCO (EUR10.1billion) and GAM (EUR9.4billion).
In other encouraging news, the Association of the Luxembourg Funds Industry (ALFI) this week announced record figures for Luxembourg’s fund industry. By end-2012, total AUM in Lux-domiciled funds reached a new high of EUR2.38trillion; an increase of 13.70 per cent year on year. Net sales for 2012 were EUR120.8billion, and with 3,841 investment funds (13,420 fund units) Luxembourg remains the largest investment fund centre in Europe, and the second largest globally after the US.
“Assets under management have not only grown in Luxembourg but in Europe as a whole, partly due to increasing market values, but also thanks to significant new inflows into investment funds,” said Marc Saluzzi, Chairman of ALFI. “We are pleased with this return of confidence in investment funds. The asset management and investment fund sector continues to play a key role in the European economy. It is ALFI’s wish that 2013 will allow asset managers to digest the numerous recent regulations and to concentrate on operational practice to expand their business.”
Schroders have announced the launch of another externally managed fund on its dedicated UCITS platform, GAIA – Global Alternative Investor Access. The Schroder GAIA Sirios US Equity fund is a fundamental long/short equity strategy, which invests primarily in US mid- and large-cap companies. The new UCITS fund will be managed by the same team of ten investment professionals running the existing Sirios US equity hedge fund and will be headed up by John Brennan, Managing Director and co-founder of Sirios, a Boston-based hedge fund established in 1999. The team focus on attractively valued, growth-oriented companies and seeks to take short positions in companies with declining fundamentals and poor balance sheets.
Commenting on partnering with Schroders to launch the strategy in a UCITS format, Brennan said: “Having successfully managed this strategy for a number of years for a largely US client base, we are excited by the prospect of extending this offering to a wider audience in the UCITS space…and look forward to contributing to the diversification of Schroder GAIA’s offering.”
“We are currently seeing strong demand for products in the US long/short space, with this strategy currently ranked first for projected net inflows in 2013. Despite this clear client demand, products of this type are in short supply, with only ten per cent of those currently available focusing on the US. Schroder GAIA Sirios US Equity provides an opportunity to extend availability of this exciting and compelling strategy to a wider audience,” added Eric Bertrand, Director, Schroder GAIA.
Schroder GAIA now has three externally managed funds: Schroder GAIA Egerton Equity, Schroder GAIA CQS Credit, and now Schroder GAIA Sirios US Equity.
Finally, Alceda Fund Management this week released its Q4 Alceda Quarterly UCITS review and found that while alternative UCITS strategies, overall, delivered strong performance in 2012, managed futures struggled to keep pace. The top performing strategy was the Equity Long Short Index, delivering 6.19 per cent. By tracking the Absolute Hedge Global UCITS Index, the latest review reveals that the Index advanced 0.8 per cent to bring total yearly gains to 3.02 per cent.
The Equity Long Short Index had the strongest returns for Q4, gaining 2.12 per cent. For 2012, the Credit Index was the second best performer, returning 5.97 per cent. However, in Q4 managed futures delivered another quarter of negative growth, the Managed Futures Index declining 2.43 per cent: equating to a 7.75 per cent loss for the year. This follows a 10.10 per cent decline in 2011.
“We continue to be encouraged by the prospects in the Alternative UCITS sector and believe alternative strategies in a UCITS format will continue to attract investors across the risk spectrum in 2013. The last couple of years have been dominated by large and diverse funds appealing to the more risk-averse investors. However, as risk appetite returns, we expect to see smaller and more nimble managers increasing their market share and challenging the bigger players to be more innovative in their offering,” commented Michael Sanders, Chairman of the Board, Alceda Fund Management.