UCITS hedge funds mainly disappoint, finds survey

Fund of hedge funds and long/short equity funds have been the most disappointing strategies in 2011, and investors are more likely to increase their allocation to Macro and CTA funds, according to the Q4 UCITS Alternative Index Quarterly Industry Survey.

Geneva-based Alix Capital, index provider to the UCITS Alternative Index, conducted the survey in the last two weeks of September, focusing on recent performances in the sector as well as future allocation trends and investment opportunities.

“It is important to note that the questionnaire does not – or only partially – takes into account the month of September performance. This could potentially bring slightly different answers should the same questions be asked now,” noted Louis Zanolin at Alix capital.

The poll found 51% of respondents believe the current market environment will have either a positive impact or no impact at all on the growth of UCITS hedge funds, while 60.7% of respondents believe recent performances will have a negative impact on new UCITS hedge funds launches.

Investors are more likely to decrease their allocation to Event Driven and Long/Short Equity funds. Some 44% of respondents expect systematic strategies to perform better than discretionary strategies in Q4.

With the exception of Macro funds, the result is a direct consequence of the performance of each strategy during last quarter: the best performing strategies for the previous months receiving the highest interests and the worst performing ones the lowest, the report noted.

In term of future allocation trends, the most notable changes compared to Q3 are witnessed in Long/Sort Equity and Event-Driven strategies. The survey shows that respondents have shifted their investment intentions from increase to decrease. Simultaneously, investment intentions for Emerging Markets funds have moved from decrease to neutral and Macro strategies from decrease to increase.

The UCITS Alternative Index series tracks the performance of both global and strategy specific UCITS hedge funds. At the end of September 2011, the UCITS Alternative Index was composed of close to 700 constituent hedge funds and funds of hedge funds, totalling €125bn assets under management.

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