Preqin research report: UCITS - The Future of Regulated Funds?
15 March 2010
Preqin carried out a survey of 50 institutional investors in order to determine the current demand for UCITS-compliant hedge funds. Four factors were most frequently listed by investors as UCITS value-added: transparency, regulatory oversight, liquidity and a strong risk management framework.
UCITS III is attracting growing numbers of hedge fund managers and investors, according to a survey by Preqin.
In February 2010 Preqin carried out a survey of 50 institutional investors in order to determine the current demand for UCITS-compliant hedge funds.
Preqin also surveyed 60 fund in order to ascertain the present supply of UCITS funds in the hedge fund industry.
The investor survey found that eight per cent of all institutional investors surveyed allocate capital to UCITS funds, and all are European-based.
Thirty five per cent of institutional investors, including investors based outside Europe, are considering adding a UCITS vehicle to their hedge fund portfolio in 2010.
Four factors were most frequently listed by investors as UCITS value-added: transparency (41 per cent), regulatory oversight (22 per cent), liquidity (22 per cent) and a strong risk management framework (11 per cent).
The report’s editor Nicole Rubbi-Clarke says: “UCITS has become increasingly popular with investors, with eight per cent of investors surveyed currently allocating capital to UCITS-compliant hedge funds and a further 35 per cent of institutional investors considering making their maiden investment in 2010. The Ucits trend has been the strongest in Europe, however, features such as transparency, liquidity and backing by solid regulation are attracting investors worldwide to UCITS vehicles; we predict the UCITS universe will continue to expand particularly as investors remain cautious and calls for increased regulation of the industry continue. Growing numbers of managers, predominantly the larger and more established managers, are accommodating investor demands by offering UCITS products. UCITS offers solutions to mitigating risks, but it also has some drawbacks such as higher structural costs and investment restrictions.”
