Industry Updates

Comprehensive Study of Alternative UCITS Funds by PerTrac Finds Long/short Equity Most Popular Strategy

Monday, January 23, 2012

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Opalesque Industry Update - Long/short equity is the most popular strategy pursued by Alternative UCITS (Undertakings for Collective Investment in Transferable Securities) funds, and overall, funds invested in emerging markets have posted the best performance from January 2002 through October 2011, according to PerTrac, the world’s leading provider of analytics, reporting and communications software for investment professionals. The 30-page report titled, “The Coming of Age of Alternative UCITS Funds,” also indicates that smaller funds outperform larger ones based on a comparison of equal-weighted and asset-weighted cumulative return of PerTrac’s Alternative UCITS Fund Index.

Released today, the PerTrac report is the most comprehensive study of Alternative UCITS funds conducted to date. Alternative UCITS funds are pan-European investment vehicles that pursue hedge fund-like strategies, but are limited in leverage and the range of illiquid assets into which they can invest.

The PerTrac study found that over one quarter of the 1,210 Alternative UCITS funds in its universe pursued long/short equity strategies. There was a virtual tie for the second most popular strategy among global macro, cta/managed futures and multi-strategy, with each strategy accounting for over 11% of the funds. Nearly 11% of the funds followed a fixed-income approach. A little more than 80% of Alternative UCITS funds are domiciled in three countries; Luxembourg (49.92%), Ireland (18.84%), and France (11.90%).

In terms of performance, PerTrac’s Alternative UCITS Fund Index posted a cumulative 62% return from January 2002 to October 2011 on an equal-weighted basis (the average monthly returns of all Alternative UCITS funds in each month cumulative), and 32% on an asset-weighted basis (which takes into account assets actually managed in each period).

Overall, growth in Alternative UCITS funds’ assets under management has been strong, but marked by peaks and valleys since the European Parliament and the Council of 21 January 2002 first granted UCITS funds greater freedom to follow alternative strategies. AUM growth of Alternative UCITS funds has increased from €5.40 billion in January 2002 to nearly €150 billion as of October 2011.

“This study indicates that Alternative UCITS funds are becoming more mainstream,” said Lisa Corvese, Managing Director of Global Strategy at PerTrac. As the study observes, “The turbulence of the last few years has compelled investors to seek out alternative investments with greater transparency, liquidity and risk controls. Based on a robust AUM growth since 2009, it would appear that Alternative UCITS funds have increasingly become a solution of choice.”

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