Study: Hedgies Prefer QIFs, SIFs To UCITS

Jun 7 2011 | 12:04pm ET

Hedge fund managers will continue to offer EU-domiciled versions of their offshore funds but may opt for QIFs or SIFs rather than UCITS funds, according to a new RBC Dexia/KPMG report.

Of the managers surveyed, 27% said they were considering creating EU-regulated funds while 24% had already brought offshore funds onshore. Of those, 55% had opted for co-domiciliation by creating onshore clone funds to complement their existing offshore offerings. Less than 5% of those with onshore funds said they had decided to transfer the domicile of their funds to the EU outright.

Jean-Michel Loehr, chief of industry and government relations at RBC Dexia, said: "The survey shows that EU fund domiciles are becoming more and more relevant to the hedge fund community, and that they respond to a real need amongst clients for more liquidity and transparency. Co-domiciliation allows hedge fund managers to cater to investors that are not authorized to buy into Cayman funds with onshore products while retaining their existing offshore strategies."

The future of co-domiciliation seems to be tied to the AIFM Directive (EU regulations for alternative investment managers). Most hedge fund managers who said they’d consider domiciling a fund in the EU said they would do so before the directive was implemented in 2013 while 69% said they were considering doing so by transferring the domicile of their existing funds to the EU.

The report also shows the bloom may be off the rose for the UCITS framework. Whereas. in past surveys, hedge fund managers were as likely to consider setting up a UCITS fund as an Irish QIF or a Luxembourg SIF, the current study shows 77% of those considering onshore structures prefer QIFs or SIFs.

Tom Brown, KPMG head of investment management for the EMEA region, said: "The market is starting to realize that even though 90% of alternative strategies can be replicated under UCITS, specialized structures such as SIFs and QIFs offer more flexible liquidity and transparency rules for hedge funds. UCITS still offers very robust protection for investors, but clearly the wholesale shift into alternative UCITS some had been predicting has not taken place."


In Depth

Q&A: Brevan Howard’s Charlotte Valeur Talks Strategy

Sep 18 2014 | 11:18am ET

Charlotte Valeur chairs the board of Brevan Howard Credit Catalysts, an LSE listed...

Lifestyle

Griffin Donates $1M To Rauner's Illinois Gov. Campaign

Sep 22 2014 | 9:29am ET

Hedge fund billionaire Kenneth Griffin definitely has a dog in this fight. The Citadel...

Guest Contributor

Top 5 Predicted Outcomes Of CalPERS' Hedge Fund Divestment

Sep 22 2014 | 8:35am ET

CalPERS’ announcement to divest of hedge funds has created a significant buzz...

 

Videos

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

September 2014 Cover

The London Whale: Rogue risk management

Credit default swaps brought down the London Whale and cost JPMorgan $6.2 billion. Here is how it happened.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.