Opalesque Industry Updates - |
• UCITS hedge funds address the traditional concerns related to the off-shore hedge fund industry, by ensuring stricter investment diversification, more rigorous risk management, better transparency, improved liquidity and superior controls.
• “Luxembourg Alternatives UCITS Platform” or “LAUP” provides hedge fund managers with an independent and open-architecture UCITS platform.
• Luxembourg is ideally positioned to become Europe’s leading hedge fund UCITS hub, already dominating the long-only UCITS funds space.
• The adoption of UCITS III funds represents the hedge fund industry’s pre-emption of the European Union’s Directive on Alternative Investment Fund Managers.
In response to the continued growth in market demand for UCITS III hedge funds and funds of hedge funds, Luxembourg Financial Group (LFG) and Ganymede Partners (Ganymede) announced the launch of the “Luxembourg Alternatives UCITS Platform” or “LAUP”. LAUP is a one-stop independent and open-architecture platform for hedge fund managers to set up a UCITS III hedge fund or fund of hedge funds.
Hedge Funds established as UCITS III offer protection for investors through a regulated framework which ensures the safe-keeping of assets, risk control, transparency, diversification and liquidity not typically associated with alternative investments vehicles.
More than half of European hedge fund companies either plan to launch regulated, onshore versions of their strategies or have already done so, according to HedgeFund Intelligence, a research group. The adoption of UCITS III funds represents the hedge fund industry’s pre-emption of the European Union’s Directive on Alternative Investment Fund Managers.
Luxembourg is the largest fund centre outside of the United States and almost 70% of UCITS III funds which are authorized for cross-border distribution in the European Union are domiciled in Luxembourg.
LFG currently manages a large range of Luxembourg-domiciled vehicles, including UCITS III funds, and will now open up their platform to hedge fund groups seeking to establish UCITS III hedge funds, effectively providing a turn-key solution to the creation of a UCIT III hedge fund or UCITS III fund of hedge fund. Only the largest hedge fund groups will be able to justify the time and costs to gain their own UCITS III management licenses which is why most turn to platform providers as a much quicker, cheaper and more effective option.
LAUP also brings together a number of specialists in the hedge fund industry. Johan Groothaert, CEO of LFG, and Gareth James, founder of Ganymede, together pioneered at Deutsche Bank the certificate re-wrap solution to make hedge funds accessible to German investors and launched one of the first managed account platforms.
“The UCITS III framework” says Gareth James, founder of Ganymede, “is very attractive for those managers seeking to target private clients across Europe, but it also acts as a stamp of approval for institutional investors looking for regulatory certainty of custody, liquidity and transparency. For investors with the resources to carry out their own operational due diligence, and the investment size to dictate their own terms, there may be a more appropriate unregulated vehicles - however for the majority of hedge fund investors, UCITS III offers this framework of certainty, and after Madoff and other losses last year, it is no coincidence that more and more investors are turning to UCITS III for their hedge funds this year.”
“There has rarely been a better time to invest in hedge funds” adds Johan Groothaert, CEO of LFG. “The dislocation caused by the financial crisis provides numerous alpha generating opportunities for hedge funds and therefore we expect hedge funds to outperform high yield and equities in the short to medium term. Whilst it is clear hedge funds have not caused the financial crisis, the concerns of investors, politicians and regulators in respect of the off-shore alternatives industry are not untoward. UCITS hedge funds address these concerns and therefore make it easier for the hedge fund industry to attract new capital flows, which is very important for the financial markets in order to balance out some of the dislocations which currently harm the overall economy.”
About Luxembourg Financial Group
About Ganymede Partners