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Alternative UCITS assets exceed €100bn for first time

Monday, August 12, 2013
Opalesque Industry Update - The Q2 2013 Alceda Quarterly UCITS Review highlights included:

  • Assets under management in Alternative UCITS strategies reaches €104.6 billion
  • Alternative credit strategies continue to attract investor interest with €3.4 billion growth in AUM
  • Managed Futures down 3.57% with a 14.3% reduction in overall AUM
  • Daily dealing funds attract 83% of assets in UCITS vehicles
  • The 49% of funds charging a management fee of 0.5-1%, account for 74% of overall assets

Following a strong start in Q1 2013, alternative UCITS funds have continued the positive trend in Q2 2013, with assets under management (“AUM”) growing by 8.3% from €96.6 billion in March 2013, to €104.6 billion at the end of Q2, breaking the €100 billion barrier for the first time. The Alceda Quarterly UCITS Review produced by Alceda reveals signs of a healthy sector.

Performance across the UCITS fund sector varied significantly, with investors focusing assets on large, blue chip funds. However, several funds launched in Q1 were able to grow their assets over the second quarter. With many investors looking to UCITS vehicles for improved liquidity, the report also reveals daily dealing funds have proved most popular with investors, attracting 83% of assets.

Michael Sanders, Chairman of the Board, Alceda Fund Management S.A. said: “With continued uncertainty in global markets, investors are looking to Alternative UCITS for diversifying strategies, increased transparency, less volatility in weak markets and improved liquidity. As a result, we have seen the Alternative UCITS sector demonstrating strong growth and investor interest, with total assets under management surpassing €100 billion for the first time. As the sector continues to mature and funds continue to build on their track records, we believe that more investors will continue to enter this market.”

Tracking the Absolute Hedge Global UCITS Index, the sector declined 0.53% in the second quarter, with losses concentrated in June, across a range of funds and strategies. The Market Neutral index performed the strongest with 1.45% growth over the quarter. The Credit Index continued to deliver positive returns, with growth in assets of €3.4 billion to €26.6 billion at the end of Q2 and delivererd 0.13% returns in the quarter. As the best performing strategy index in Q1, Equity Long Short continued its positive run, growing AUM by 12% and registering 0.38% returns in Q2.

Managed Futures, despite registering the first positive quarter in over two years in Q1, had another challenging quarter in Q2. The strategy index was down 3.79% over the quarter with a 14.3% reduction in AUM, including one fund closure. The UCITS vehicle was closed due to concerns regarding commodity exposure and the use of index swaps following last year’s ESMA guidelines.

In an analysis of UCITS fee structures, the report found that 49% of funds in the sector charge a management fee of between 0.50-1.00% for institutional share classes. However, these funds control 74% of the overall assets in the sector, showing investors moving assets into low-fee products. Similarly, investors are showing more interest in funds without performance fees. While 62% of alternative UCITS funds have adopted the 20% performance fee model, these funds have only attracted 31% of overall assets.

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