A full 69% of institutional investors polled by Alix Capital expect to increase their allocations to UCITS funds in 2013.
Alix polled 52 investors—including single fund and fund of funds managers investors (over 40% of respondents), banks, insurers, pension funds, high-net-worth individuals and service providers—in December 2012.
The survey revealed a significant shift in allocation intentions, with respondents planning to increase their investments in long/short equities, emerging markets and event-driven strategies while reducing (for the first time since summer 2011) their fixed-income investments.
Private banks are expected to be the main buyers of alternative UCITS products, followed closely by pension funds.
Investors polled told Alix felt the transparent, regulated and liquid nature of UCITS funds appealed to institutional investors although the constraints and fees associated with the funds might not suit more sophisticated investors.
Over half of respondents felt UCITS performance would have to improve to attract increased allocations from institutions.
Said Louis Zanolin, CEO of Alix Capital, in a statement: "While the majority of institutional investors understand the advantages that UCITS hedge funds can offer them, especially in regards to liquidity, transparency and regulation, there are still many improvements that need to be made to improve the perception of UCITS as a competitive framework. Providers need to enhance communications with the investment consultant community to improve their understanding and awareness of the UCITS alternative space.
"Our survey has proved to be an effective indicator of future inflows, therefore I am encouraged to see almost 70% of respondents expecting an increase in allocation to UCITS in the first half of 2013. UCITS hedge funds assets have experienced steady growth, increasing by 16.4% in 2012 to reach a new high of €143 billion, and respondents expect this trend to continue in 2013."