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Alternative Market Briefing

Alternative UCITS trends: asset outflow and growth in quant strategies

Friday, April 12, 2019

amb
Tim Vanvaerenbergh
B. G., Opalesque Geneva:

The market for alternative UCITS, the more hedge fund-type of UCITS funds, has doubled since 2008, but underwent its first outflow since then in 2018. According to LuxHedge's database, it now stands at €400bn ($452bn), with about 1,400 funds.

Despite the outflow, "the number of funds is relatively stable," Tim Vanvaerenbergh, CEO of LuxHedge, a Luxembourg-based investment research boutique, tells Opalesque. "Each month, 15 to 20 funds are launched and 10 to 15 funds are liquidated. So there is a growing trend in the number of funds but it is starting to slow down."

Average fund losing alpha

"Last year's outflows were due to disappointment in performance of the average fund," Vanvaerenbergh adds.

Furthermore, when comparing the MSCI Europe index to the LuxHedge Global Alt. UCITS index, one can see the average fund is losing alpha.

The average fund "is more about the average experience of the investors in this space," he notes. And this experience has been quite negative, as managers on average did not create alpha in 2018.

AuM: interesting reallocations

According to Vanvaerenbergh, some very interesting reallocations took place in 2018 in the shape of large inflows in discretionary macro, which mainly went to one successful manager.

There were also a lot of inflows in altern......................

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