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Despite negative returns, UCITS hedge funds grew in number by 6% in Q3 (to 705) with assets reaching Eur121.7bn

Friday, October 28, 2011
Opalesque Industry Update - According to Alix Capital SA's Third Quarter (Q3) Report, all single UCITS strategies are now down since the beginning of the year with the exception of Commodities (up 0.10%); the number of single manager UCITS hedge funds increased from 665 to 705 (6%) in Q3, a growth lower than in Q1 and Q2; the total amount invested in single UCITS hedge funds grew by 7.16%, reaching EUR 121.70bn and by almost 32% YTD; and Luxembourg remains the most attractive domicile for UCITS hedge funds.

Geneva-based Alix offers specialized consulting services in the field of UCITS hedge fund investments, and manages the UCITS Alternative Index series.

The UCITS Alternative Index Global lost -3.04% (in Q3), reaching -3.85% YTD. Among UCITS hedge funds strategies, Emerging Markets lost -10.15%, Long/short Equity lost -4.64% and Event-Driven lost -3.41% in Q3. The only exception among single strategy was CTA, which gained 1.60% over the last quarter. The UCITS Alternative Index Funds of Funds lost -2.60% over the quarter, reaching -4.08% on YTD.

Number of funds
The number of single manager UCITS hedge funds increased from 665 to 705 funds during the quarter. This represents a 6% increase (or 24% annualized). This is slightly lower than the first two quarters of the year which saw an increase of 7.7% and 6.6% in respectively Q1 and Q2. Since the beginning of 2011, the number of single manager funds grew by 21.9% to reach 705 funds.

The number of Funds of Funds grew by 7.4% in Q3 to reach 73 (28% YTD). Long/Short Equity, Macro and Fixed Income are the strategies with the largest number of constituents, commodities and Event-Driven are the smallest strategies in term of number of funds.

So far 127 funds were added to the UCITS Alternative Index this year.

In terms of assets under management, the total amount invested in single UCITS hedge funds grew by 7.16% in Q3, reaching EUR 121.70 bn. Since the beginning of the year, global assets under management grew by 31.98%. Funds of Funds assets on their side progressed by 43.5% in Q3 and by 36.74% in 2011. The strategy with the largest progression of assets under management is Multi-Strategy. As experienced in the previous quarter, most of the progression is due to one fund which attracted over EUR 1 billion during the quarter. FX is the only strategy which lost assets since the beginning of the year.

At the moment the asset under management distribution remains stable over time with a large number of funds (27%) with less than EUR 20m AUM and 50.3% of funds with less than EUR 50m.

Domicile and liquidity
Luxemburg, France and Ireland are the three most important place of domiciliation for UCITS hedge funds with respectively 49%, 19% and 18% market share.Since the beginning of the year, among the 104 new funds added to the database, 58% are based in Luxemburg, 15% in Germany and 11% in Ireland.

The liquidity profile of UCITS hedge funds remains stable, with 84.1% offering daily liquidity, 15.4% weekly and 0.5% bi-monthly.

Performance table: Source

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