UCITS Investors Eye Equity Market Neutral, Macro, Volatility Funds

Jul 2 2012 | 12:59pm ET

Equity market neutral, macro and volatility are the most popular UCITS hedge fund strategies according to a new survey from Geneva-based Alix Capital.

The three strategies are likely to see the highest allocations in the next six months, according to the survey, with at least 50% of respondents intending to increase their allocations. The biggest winner will be volatility strategies, which should see 55% of their current investors up their allocations.

On the flip side, respondents are less enthusiastic about fixed income and long/short equity, with 24% of respondents intending to decrease their allotments to the former and 18% intending to cut allotments to the latter.

The vast majority (65%) of respondents told Alix they expected UCITS asset under management to increase over the next six months and 70% said they still have faith in the fund of funds model in the UCITS context.

Respondents listed better regulation of fund counterparties and better legal oversight as the main attractions of UCITS funds of hedge funds, followed closely by the broader distribution possibilities offered by UCITS structures. Tax advantages and lower operational risk were seen as slightly less important factors.

But 15% of respondents do not think there are enough single-manager UCITS funds out there to support the fund of funds model.

Louis Zanolin, CEO of Alix Capital, said in a statement: “Respondents believe the assets under management of UCITS hedge funds will continue to increase in the second half of 2012 and these results support our belief that the UCITS structure will continue to bring new opportunities and increased choice to investors looking to allocate to alternatives.

Alix Capital’s figures show the number of UCITS funds has grown 64% annually, on average, since 2008 but 41% of those funds manage less than EUR 20 million.

Alix conducted its survey in mid-June, surveying 60 participants, 76% of which were single-fund and fund-of-fund managers with the rest made up of banks, insurers, pension funds, hight-net-worth individuals and service providers. Of all respondents, 55% were investors.

Alix provides the UCITS Alternative Index series with over 850 constituent funds managing a total of EUR 127 billion as of May 2012.

 


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