The UCITS III-compliant hedge fund business has surpassed an impressive milestone.
There are now more than 1,000 such single-manager funds, according to the latest monthly fund report from Naisscent Capital/ucitsfunds.eu. There are also more than 100 UCITS-compliant funds of funds.
Some 65% of the funds debuted after the financial crisis, as investors clamored for the relative safety of the highly-regulated products. Some 350 such funds launched last year alone, with another 150 this year.
Long/short equity strategies are most popular, making up about 22% of UCITS hedge funds. Absolute return accounts for about 18% and equity market neutral 7%.
Luxembourg is the undisputed capital of the UCITS universe, with more than half of the funds, 555, domiciled in the Grand Duchy. Ireland boasts 225 and France 130.
What the report doesn’t say is just how much money these funds manage. Luigi Amato, the report’s publisher and a partner at Naisscent Capital, told FINalternatives determining the total assets managed by the 1,000 funds surveyed was difficult because not all funds report that information. Naisscent’s best guess at total alternative UCITS AUM puts it between $80 and $120 billion, which means the regulated funds have a way to go to catch up to the broader hedge fund market, which manages some $2 trillion.
Some critics have expressed concern about the long-term sustainability of alternative UCITS and the extent to which traditional hedge fund strategies must be modified to fit the UCITS wrapper with its requirements for things like bi-weekly liquidity. The Naisscent report, however, shows that 85% of single funds report daily prices and almost all funds offer daily or weekly liquidity.