Hedge funds

Hedge Funds Face Competition as UCITS AUM Increases 18.5%

As we previously documented towards the end of June, Undertakings for Collective Investments for Transferable Securities- commonly abbreviated as UCITS– have become an increasingly popular alternative to hedge funds. Fresh reports indicate that UCTIS hedge funds now have assets worth €134 (approx $216 billion) since the onset of the year, representing an 18.5 percent increase.

Hedge Funds Face Competition as UCITS AUM Increases 18.5%

Alix Capital, a Geneva-based analytics firm, published the findings of its study, revealing that most of the increases in assets managed from AUM to date, were witnessed in the three current largest single-strategy hedge fund managers. These include GAM, which is up 29.0 percent, Standard Life Investments, which increased 43.6 percent, and M&G which increased notably by 63.9 percent.

Alix Capital’s study also revealed that there were 17 new launches for single-strategy funds in the Q3 alone, adding up to the 62 launches YTD, and bringing the overall number of similar funds to 791. Deeper studies revealed that 27 percent of the new funds hailed from the U.S., 20 percent from Germany, 33 percent in the U.K., and 20 percent in France. The majority of these funds still remain at Luxembourg, which represents close to 46.1 percent of the entire number of UCITS in the world. The study also reveals that fixed income strategies are the most popular, constituting 33.7 percent of the cumulative UCITS AUM.

Owing to the growing popularity of UCITS hedge funds, Alix Capital has decided to add UCITS hedge fund platform data in its analysis, remarking that assets on these platforms have swelled 14.3 percent to €9.3 billion (around $15 billion). The UCITS hedge fund platforms are expected to grow in subsequent quarters, as noted by Alix Capital CEO, Louis Zanolin.  “We have added platforms to our quarterly research, as it represents an important part of the UCITS hedge funds landscape and this is likely to continue growing as the market evolves,” notes the CEO.

Exclaiming our previous outlook

As we had earlier noted, UCTIS are becoming increasingly popular. More so after the dreaded 2008 financial crisis that mucked up the names of hedge funds. We clearly highlighted that investors particularly prefer UCTIS to hedge funds, because UCTIS extend platforms for investors to diversify their assets, minimizing risks. Similarly, UCTIS have more rigorous regulatory framework, offering a better alternative to the less-regulated hedge fund structure.

In conclusion, it would be out of order to say that UCTIS have stolen the thunder from hedge funds- the latter has over $2 trillion in assets, while UCTIS have barely reached the $1 trillion mark. Nonetheless, UCTIS are becoming more and more popular as recurrently noted in the article.


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