Monday, August 9, 2010

JonesL US hedge funds embrace the benefits of Ucits

Ucits, though, are the biggest thing in the hedge fund industry. Ostensibly a variety of European mutual fund, tightly regulated by EU laws, they have become the toast of London’s Mayfair and now New York.
In depth: Hedge funds - Jun-08
Paulson joins trend with launch of retail fund - Jul-21
Ucits catch on with US managers - Jun-06
Prop-hostile climate throws up tough calls for banks - Aug-03
Ucits brand threatened by growing complexity - Jul-11

Thanks to tweaks in the EU laws that created Ucits, hedge fund managers have discovered ways to repackage their strategies in Ucits form. In doing so, they have accessed retail and institutional investors who had been shut out of the high-octane hedge fund world.

“Ucits hedge funds now account for 7 per cent of the total hedge fund universe of $1,500bn but have attracted 20 per cent of the net inflows into the industry year-to-date,” according to Alexander Mearns, chief executive of Eurekahedge.

Hitherto, almost all Ucits start-ups have been European. But, as the accents in Monaco at the GAIM hedge fund conference this June attested, there are signs that is changing.

The attraction for US managers – as for European – is twofold. First, Ucits funds are to be exempt from the forthcoming AIFM directive, an EU law that threatens to freeze US managers out of Europe. Second, Ucits are a way for hedge funds to tap a vast institutional investor base.

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