Opalesque Industry Update - The latest quarterly European research on the UCITS hedge funds industry published by Alix Capital, the Geneva-based provider of the UCITS Alternatives Index (UAI) family of indices, reveals that more than half the inflows into UCITS hedge funds (56%, EUR 13.2 billion) were allocated to fixed income strategies during 2012, followed by macro strategies (24.7%, EUR 5.8 billion). |
Other key findings include:
UCITS hedge funds assets under management (AUM) increased by 20% in 2012 reaching a new high of EUR 140 billion
The three largest single strategy managers all witnessed significant increases in UCITS hedge fund AUM in 2012: Standard Life Investments' AUM increased 59.8% to EUR 17.437 billion; GAM was up 41.2% to EUR 12.535 billion and M&G’s AUM doubled to EUR 10.801 billion
EUR 4.7 billion was invested in fixed income strategies in Q4, representing 72% of the total inflows to UCITS hedge funds for the quarter
Three funds achieved performance gains in excess of 30%, 22 returned a performance greater than 20% and 84 achieved a performance above 10% in 2012
Louis Zanolin, CEO of Alix Capital, says: “Despite the current economic environment, the total assets managed in UCITS hedge funds continued to grow at a stronger rate than the rest of the hedge funds universe.
“Fixed income was the most popular strategy and I believe this was not only money shifting from other strategies in the hedge fund space, but from long only products as well. Investors wanting exposure to fixed income are looking to absolute return funds in order to limit their risk exposure. Traditional offshore investors are also looking to UCITS vehicles for increased liquidity and to meet new regulatory constraints.
“In 2012 the five largest fixed income funds attracted 55% of total inflows into the UCITS hedge funds sector across all strategies, and 90% of the inflows into fixed income strategies. This can be attributed to performance – some of these large funds achieved the best results in 2012, for example M&G Optimal Income – but also to investors’ preference for blue chip names, especially true for new investors coming from the long only space.”
The report provides in-depth information on 802 single manager alternative UCITS funds and 80 alternative UCITS fund of funds, as well as UCITS hedge fund platforms analysis. It covers strategy breakdown, fund and advisor location, liquidity, asset flows, assets under management (AUM) and performance for UCITS single strategy and fund of hedge funds.
Other key findings of the report are summarised below:
Performance and strategies:
The largest three fixed income advisors in UCITS hedge funds by AUM are M&G (EUR 10.8 billion, up 107.3%), Pimco (EUR 10.1 billion, up 74.2%) and GAM (EUR 9.4 billion, up 42.4%).
The largest three equity long/short advisors by AUM are Blackrock (2.2 billion, +29.1%), Exane Asset Management (EUR 2.1 billion, down 31.6%) and Man Investments (EUR 1.6 billion, up 13.2%).
Within macro strategies, BNY Mellon doubled its UCITS hedge funds AUM in 2012 to EUR 9.8 billion, up 94.9% over its two funds (Newton Real Return and BNY Mellon Global Real Return). This is over seven times the AUM of the second largest macro advisors, Aquila Capital, with assets of EUR 1.4 billion.
Among the multi strategy fund managers Standard Life Investments dwarfed its competitors with a 63.7% increase in AUM in 2012 to EUR 17.154 billion. This is almost 50 times greater the next largest multi strategy UCITS hedge fund.
Emerging Markets is the best performing strategy with an increase of 5.38% at the end of the year, followed by Long/Short Equity with 4.88%. Commodities has been the worst performer, down -5.44% in 2012.
Fund of funds
Despite a bad year in terms of performance for fund of hedge funds in general, some witnessed strong growth. Credit Suisse Asset Management Ltd attracted EUR 258 million new inflows in 2012 for its two funds. Its AUM stands at EUR 606 million, up 74.0% in 2012.
UCITS hedge funds platforms
UCITS hedge funds platforms offer 100 single manager UCITS hedge funds totaling EUR 9.6 billion assets under management as of the end of the year.
The total assets managed by the 19 UCITS hedge funds platforms progressed by 17.2% in 2012 and now represent 6.78% of the total assets managed in the UCITS universe.
Deutsche Bank DB Platinum is the largest platform in terms of AUM (EUR 2.01 billion), 21.2% of the market, while Universal Investment had the highest number of funds (14) at the end of 2012 representing 13.9% of UCITS hedge funds on platforms.
The liquidity profile of single UCITS hedge funds remained the same in Q4 2012 with 82.7% offering daily liquidity, 16.7% weekly and 0.6% bi-monthly.
Luxembourg, France and Ireland continue to be the most popular domiciles for UCITS hedge funds with 46.1%, 18.1% and 16.7% market share respectively.