Most classical hedge fund strategies are in large demand in a UCITS format, according to ML Capital Asset Management, the investment manager and promoter of the MontLake UCITS platform.
The MLC Alternative UCITS Barometer, a tool that surveys active investors currently allocating to UCITS about their forthcoming strategy allocations, revealed that most of the primary “UCITS-able” hedge fund strategies are to see large inflows in the coming months.
Global Macro Discretionary strategies are expected to experience the largest inflows of capital in the coming months, with 59 per cent of respondents planning to increase their exposure to the asset class. Investors also see significant potential in the Event Driven sector with 56 percent of respondents planning to increase their Multi Strategy holdings, closely followed by Merger Arbitrage (53 per cent) with expectations for rising M&A activity in 2011.
Long/Short Equity funds also appear well positioned to experience inflows, with 97 per cent of investors planning to either increase or maintain their US and Global Long/Short Equity allocations. The growing interest in and the existing undersupply of both strategies within the UCITS space is expected to lead to a number of new fund launches over the coming months.
Quantitative strategies also appear to be an attractive option for investors with 44 per cent looking to boost their allocations to CTAs and managed futures.
John Lowry (pictured), Chairman and founder of ML Capital, says: “The alternative UCITS industry is still in its infancy and the large demand indicated in our initial survey for most of the primary hedge fund strategies is a reflection, I believe, of the fact that the vast majority of proven hedge fund strategies have yet to arrive in the UCITS game. It is clear that there is growing investor preference for well regulated absolute return investment products that offer attractive returns. The movement towards investing in alternative UCITS is demonstrating that this is not just a knee jerk short term reaction but a real trend that has created significant asset raising opportunities for those managers who have spotted the UCITS market potential in this early yet exciting stage.”