UCITS hedge funds account for a small share of the $2.1 trillion hedge fund universe, but that share is growing.
According to new research from Alix Capital, a Geneva-based provider of UCITS indices, these regulated funds now manage assets worth €120 billion, up from €32 billion in March 2009.
Fixed income remains the most popular UCITS strategy, accounting for 32.3% of total assets (€36.4 billion), followed by macro with 15.8% and long/short equity with 15.2%.
Alix’s latest quarterly research found there were 764 single-manager alternative UCITs funds and 76 alternative UCITs fund of funds. The number of single-manager funds is up from Q1 2011, when it stood at 623. Fifty per cent of new launches in Q1 were equity long/short funds, 15% equity market neutral, 10% macro and 10% volatility. Moreover, 67% of all new launches were domiciled in Luxemburg.
The three largest fund houses—Standard Life Investments, BNY Mellon and GAM—accounted for 24% of total UCITS assets or €30 billion. The 20 largest funds in the universe accounted for 46.3% of total AUM.
Louis Zanolin, CEO of Alix Capital, said in a statement: “Investors still want to allocate to alternatives in order to add alpha to their portfolios, but are looking for alternatives to offshore funds. We believe we will see a significant upswing in the popularity in UCITS hedge funds in coming years, and the regulatory environment will encourage more managers to launch UCITS products, enhancing the choice of products available to investors.”
As measured by the UAI Global index, UCITS hedge funds returned an average of 2.25% in Q1 2012. CTA was the only strategy to end the quarter in the red (down 0.99%). The best performers were emerging markets (up 4.44%), long/short equity (up 2.49%) and event-driven (up 2.17%).
Most UCITS funds (46.2%) are domiciled in Luxemburg. France is home to 18.5% and Ireland to 17.7%.