Research undertaken by HFMWeek suggests that dedicated UCITS platforms could potentially
Research undertaken by HFMWeek suggests that dedicated UCITS platforms could potentially attract USD7billion in asset inflows by the end of next year. In what is one of the fastest growing fund sectors, “newcits” look set to dominate well into next year as hedge fund managers and traditional long-only fund houses converge in the UCITS space. The common denominator: investors looking for greater liquidity and absolute return strategies. Already this year, Morgan Stanley (FundLogic Alternatives), ML Capital (Montlake) and Merchant Capital have launched dedicated platforms, bringing the total number up to six. Widely regarded as the industry’s leading dedicated platform, the Merrill Lynch Investment Services (MLIS) platform, with nine funds totalling USD1.3billion in AUM, expects to have 20-25 funds and USD3.7billion in AUM within twelve months, platform head, Miriam Muller, told HFMWeek. LFG is another independent “platform”, offering managers future-proof solutions by allowing them to choose their own service providers.
Matrix hopes to add five-to-seven funds at an average of USD50million, whilst both Merchant Capital and Montlake expect to see AUM of roughly USD500million. Furthermore, Morgan Stanley’s FundLogic Alternatives platform expects to have 10-15 funds and AUM1billion. Hedgeweek spoke with LFG’s Head of Hedge Funds Solutions, Gareth James (pictured), who confirmed he was very bullish on next year. “If you look at current AUM in hedge fund UCITS it’s about 6 per cent of hedge funds’ total assets but that number has huge potential to grow, possibly reaching 10 per cent by the end of next year,” said James. “At LFG we expect to grow our existing 10 managers to beyond 20 by end-2011 and I’d be disappointed if that didn’t equate to USD500million in AUM.” James believes that UCITS is already transforming the European fund industry. “It’s giving many hedge funds the chance to escape from being classified as just part of the hedge fund asset class, and instead be investment solutions within multi-asset class top-down allocations. This is a huge change.” In calculating the USD7billion forecast, HFMWeek charted the size, scale and nature of the top ten funds based on AUM.