Industry Updates

UCITS investors prefer global macro and event driven strategies, ML Capital survey finds

Wednesday, April 20, 2011

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Opalesque Industry Update - In its latest survey on the growing market for New UCITS (NUCITS*), ML Capital has seen that the largest growth in investor demand this quarter, has been for Global Macro strategies. 87 percent of respondents are planning to increase or maintain their exposure to macro funds.

ML Capital surveyed a diverse range of active investors in NUCITS, who collectively manage €40 billion and today invest upwards of €10 billion of those assets into NUCITS Funds. Questions are aimed at discovering their forthcoming strategy allocations and are asked each quarter to the same respondents in order to track asset flows between NUCITS strategies. Key highlights this quarter are as follows:

 Global Macro is the single most popular strategy in this quarter’s survey, with 87% of respondents planning to increase or maintain their exposure to the sector, and a very impressive 54% planning to increase their investment.

 US Equity Long/Short funds remain the most popular equity strategy this quarter with 49% of investors looking for more exposure to the area.

 In the Emerging Markets sector, the most popular choice is Global Emerging with over 40% of respondents planning to increase their allocations. Global Emerging funds have now overtaken Pan Asian strategies as the most popular route for emerging market exposure. However a clear bottleneck of supply may hamper growth in both sectors.

 Event Driven strategies including those seeking to profit from corporate mergers, are also likely to see strong inflows. The most popular Event Driven strategy is Merger Arbitrage, reflecting the expectations of growing M&A opportunities.

 Managed Futures and CTAs also received strong indications of support with 95% planning to increase or maintain their investments to the area. This strong demand will encourage an increasing number of CTAs to launch NUCITS over the coming year.

Commenting on the latest survey, John Lowry, co-founder and Chairman of ML Capital: “NUCITS remains a fledgling industry with the majority of managers and investors yet to commit or reveal their hands. However, the sector is maturing rapidly and we are aware of a number of strategic developments being planned which will move the industry to centre stage over the coming months.

Sitting on the side-lines does not appear to be an option any longer for most players.”

* Rather than the somewhat fabricated term NEWCITS, - we employ what we believe to be the more appropriate NUCITS, as it stands for New UCITS.

(press release)

Incorporated in Malta and regulated by the Malta Financial Services Authority, ML Capital is an independent and privately-owned financial services group specialising in advising on and delivering alternative investment solutions and strategies for the investment industry. ML Capital provides a truly global service for its clients from its headquarters in in Malta and operations centres in London, Geneva and Dublin. www.montlakeucits.com

The MontLake UCITS Platform, domiciled in Ireland and regulated by the Irish Financial Regulator provides investment managers with a turnkey solution for launching a UCITS fund under its umbrella structure. Typical time to market is 10 weeks, or less, with the platform offering immediate access to a wide range of investors through ML Capital’s distribution network. www.montlakeucits.com

Ronnie Tanti, Chief Risk Officer at ML Capital participated in our late-2010 Opalesque Malta Roundtable: www.montlakeucits.com

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