Alternative UCITS assets grow by 375% in three years – Alix Capital

Alix Capital, the Geneva-based provider of the UCITS Alternatives Index family of indices, has published its latest quarterly report showing alternative UCITS assets under management have almost quadrupled in the last three years.

The sector has expanded by 375%, with UCITS hedge funds AUM increasing by +6.2% in Q1 2012 alone. Fixed income remains the largest strategy, accounting for 32.3% of assets. The three largest fund houses out of the 764 single manager alternative UCITs funds and 76 alternative UCITs fund of funds polled account for 24% of total assets,

Half of new launches in Q1 2012 were equity long/short funds, and 67% of new launches were domiciled in Luxemburg

Louis Zanolin, CEO of Alix Capital, says: “The UCITS hedge funds industry has maintained its long term growth trend over the quarter and this will continue as investors increasingly require the transparency, liquidity and regulatory oversight that UCITS vehicles offer.

“Investors still want to allocate to alternatives in order to add alpha to their portfolios, but are looking for alternatives to offshore funds. We believe we will see a significant upswing in the popularity in UCITS hedge funds in coming years, and the regulatory environment will encourage more managers to launch UCITS products, enhancing the choice of products available to investors.”

Among key findings of the report:

   – UCITS hedge fund assets under management increased in Q1 from €113bn to €120bn (+6.2%). AUM have almost quadrupled in the last three years, in March 2009 assets stood at just €32bn (see chart 1). Around 72% of the progression in Q1 2012 is due to investor inflows, and 28% is due to fund performance.

   – The number of single manager funds was up +2.55% during the first quarter, and now stands at 764. This represents a 22.8% increase since March 2011, when there were 623 single manager funds. Fifty per cent of new launches were equity long/short funds, 15% equity market neutral, 10% macro and 10% volatility.

   – At the end of Q1 2012, the three largest asset managers in the alternative UCITS space were Standard Life Investments, followed by BNY Mellon and GAM. The total assets managed by these three firms were close to €30bn or 24% of the total assets managed in UCITS hedge funds. The 20 largest funds in the universe accounted for 46.3% of the total assets under management.

   – Fixed Income is the largest strategy in term of assets, accounting for €36.4bn or 32.3% of the total assets in single UCITS hedge funds. It is followed by Macro and Long/Short Equity with 15.84% and 15.20% respectively (see chart 2)

   – The UCITS hedge funds industry, as measured by the UAI Global index, delivered an average return of 2.25% over the quarter. With the exception of CTA (-0.99%), all strategies performed positively in the first quarter. The best performing sectors were emerging markets (+4.44%) followed by long/short equity (+2.49%) and event-driven (+2.17%).

   – Some 83.2% of UCITS hedge funds offer daily liquidity, with 16.3% offering weekly and 0.4% bi-monthly. Geographically, Luxemburg, France and Ireland are the three most important domiciles for UCITS hedge funds with market share at 46.2%, 18.5% and 17.7% respectively (see chart 3).

With 840 constituent funds as of March 2012 totalling €120bn assets under management, the UCITS Alternative Index family is composed of 19 different benchmarks tracking the returns of both global and strategy specific UCITS hedge funds. The performance of the various UCITS Alternative Indices can be viewed at www.ucits-alternative.com.

 

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