An article in the Financial Times this week reported that some industry figures believe an alternative Ucits III-compliant vehicle could
An article in the Financial Times this week reported that some industry figures believe an alternative Ucits III-compliant vehicle could potentially blow-up within the next two years as managers push the regulation boundaries. With new funds launching every week, regulators are struggling to keep pace with how managers are executing their strategies. Voices of concern have been raised for a while now, with some commentators believing that too many managers are shoe-horning their funds into a UCITS wrapper to make up for the raft of redemptions incurred following the global financial crisis. An executive at one US investment bank told the Financial Times that they were “absolutely positive there will be a blow-up in the next two years”, adding that it’s a “disaster waiting to happen”. Already last year, BlueCrest Capital had to remove their UCITS fund from BAML’s MLIS platform over tracking error concerns. The European Securities and Markets Association (ESMA) are believed to be currently reviewing instruments being used in newcits. Whilst they said that regulations today represent significant safeguards to retail investors, they were looking into the use of complex strategies. “In light of this information, we will consider whether additional steps need to be taken,” they said.
