Industry Updates

Alix Capital survey finds consultants behind the curve on UCITS hedge funds

Tuesday, March 05, 2013

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Opalesque Industry Update - Alix Capital, the Geneva-based provider of the UCITS Alternatives Index (UAI) family of indices, has published its latest UCITS Alternative Index Trends Survey on the state of the UCITS hedge funds industry. The survey examines institutional investors’ attitudes to the sector, and showed that 38% of respondents believe that investment consultants are behind the curve when it comes to advising their clients on this sector.

The survey also reveals a significant shift in allocation intentions. For the first time since summer 2011, respondents plan to decrease their allocation to fixed income and increase allocation to equity long short strategies.

Key findings include:

UCITS hedge funds assets under management are expected to continue to grow in the next six months, with 69% per cent of respondents expecting to increase their allocation in 2013.
Long/short equity is likely to be the most popular strategy in the next six months, with 48% of respondents intending to increase their allocation. Emerging markets and event-driven are the next most popular strategies with at least 35% of respondents intending to increase their allocation.
36% of respondents plan to decrease their exposure to fixed income.
Private banks are expected to be the main buyers of alternative UCITS products, followed closely by pension funds.
Respondents agreed that UCITS alternative funds appeal to institutional investors as they provide access to absolute return strategies in a regulated, transparent and a liquid manner.
In terms of drawbacks, participants point out that the level of investment constraints and fees may not be suited to sophisticated investors.
Over half of respondents believe that performance needs to improved for institutional investors to increase their allocation.

Louis Zanolin, CEO of Alix Capital, says: “While the majority of institutional investors understand the advantages that UCITS hedge funds can offer them, especially in regards to liquidity, transparency and regulation, there are still many improvements that need to be made to improve the perception of UCITS as a competitive framework. Providers need to enhance communications with the investment consultant community to improve their understanding and awareness of the UCITS alternative space.

“Our survey has proved to be an effective indicator of future inflows, and I am encouraged to see almost 70% of respondents expecting an increase in allocation to UCITS in the first half of 2013. UCITS hedge funds assets have experienced steady growth, increasing by 16.4% in 2012 to reach a new high of EUR 143 billion, and respondents expect this trend to continue in 2013.”

The survey was conducted in December 2012. There were 52 participants including single fund and fund of funds managers investors (over 40% of respondents), banks, insurers, pension funds, high net worth individuals and service providers.

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