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ML Capital: first real revolution in hedge fund business has started; regulations will force funds into becoming mainstream investments

Tuesday, October 20, 2009
Opalesque Industry Updates - According to a report received by Opalesque, John Lowry of the European advisory firm ML Capital gave an interesting speech as guest speaker at the 5th Annual Hedge Funds World LatAm 2009 Conference yesterday.

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John Lowry, chairman and co-founder of ML Capital, today warned the cream of Latin American hedge fund managers at the 5th Annual Hedge Funds.World LatAm Conference that many hedge fund managers do not realise their industry is undergoing a revolution. He predicts that new US and European regulations will force them into becoming mainstream investments.

As one of Europe’s leading hedge fund distributors and the Miami conference’s guest speaker from Europe, John Lowry said “In 2008, the MSCI World fell by 42%, whilst the average hedge fund fell by 18.3%. Many hedge funds demonstrated they offer significant benefits when used for their original purpose of creating steadier returns for their clients. My company’s recent research shows that this is what is leading to the upsurge of institutional investors’ demand for portfolio-hedging and hedge funds.”

“Emerging markets are likely to continue as an increasingly popular investment destination for some years” he continued. “LatAm markets and LatAm-focused hedge funds will be major beneficiaries. What a fantastic opportunity for Latam hedge fund managers to start winning Europe’s pensions & investment fund managers as long-term investors.”

However, many Euro-politicians have reacted to the crunch by proposing punitive conditions on the distribution of funds that are not domiciled within the EU. This is protectionism, effectively, and it has been suggested that funds should have an EU identity to trade there, or at the very least, should hold EU marketing passports. ML Capital’s research suggests that this would immediately slash demand for Latin American funds in their present form, just when they have so much to offer.”

Fortunately, Lowry sees a solution. “My instinct is that the most restrictive aspects of the proposed UCITS III legislation will not be put into practice. However, investors now require evidence of greater risk controls and regulation. The UCITS III ‘stamp of approval’ is now available to many hedge funds, and I hope and believe that by embracing the UCITS framework, Latin American hedge funds will be welcomed across the world, including the EU.”

Although hedge fund managers have traditionally shied away from public scrutiny with offshore-registered funds, John Lowry believes they may now see the benefits of taking the European onshore route for parts of their business. He said that UCITS III-type funds consisting of one or more hedge funds will be able to be marketed to retail as well as professional investors throughout Europe. He believes that a new market of 200 million EU citizens will attract those LatAm hedge fund managers that are willing to take advantage of the seismic changes taking place.”


About ML Capital
ML Capital is a leading independent European provider of both advisory and business development solutions for alternative assets managers. It is based in Malta and Geneva and is owned by its management. ML’s expertise includes marketing, product development, capital introductions, due diligence, ethics, and governance. ML’s industry contacts, personally developed over decades, now include over 1,500 leading investors and more than 1,000 managers and funds, worldwide. www.mlcapital.com


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