Fund selector community speaks out on latest trends

Liquidity, Ucits and property assets are among the trends discussed by fund selectors in our latest roundup.

ILLIQUIDITY PREMIUM

Stephane de Vaulx

Stephane de Vaulx, global head of alternative advisers from  Société Générale Private Banking says: “The hedge fund industry is creating more liquid, transparent and controlled versions of their traditional offshore hedge funds.

[But] we are also seeing some hedge fund managers starting to create private equity type vehicles, closed ended for five years, and structured outside the hedge fund, dedicated to investing into the less liquid assets (structured credit, such as asset backed securities or residential mortgage-backed securities).

One has to remember that assets such as these, which can be liquidated in normal conditions in markets, can become very illiquid if markets start freezing.

As a lot of investors are choosing liquidity, those less liquid markets are understretched. We would consider exposure to them for our clients, but in the private equity portion of our clients’ allocations.”

FACING THE ONSHORE IMPERATIVE

Cyril JulliardCyril Julliard, chief executive officer at ERAAM says: “Hedge funds launching Ucits versions are looking for assets. If you are a hedge fund with uncorrelated and good returns, you shouldn’t need to run after assets, and therefore shouldn’t need a Ucits version of your fund.

Ucits structures are good for distributors of funds but less so for institutional investors. Long/short large caps can be replicated in Ucits format, although shorting with CFDs is not that convenient.

Institutional investors generally have not asked us for Ucits, but for dedicated accounts, funds on platforms and insist for managers to have transparency.

A few continental investors have asked us to invest in Ucits funds. That reminds us of those investors who, five years ago, invested in funds of funds programmes with weekly or daily liquidity, a nonsense.”

FUND SELECTION IN A TIME OF CHANGE

Per Torpare

Per Torpare, deputy head of asset management and saving products from Nordnet says: “As a platform services provider regulated as a bank and with origins in online stock broking, the context of selecting funds has shifted over time for Nordnet.

When it added a fund platform to its stockbroking services, it simply announced to customers it had 1,000 funds on the platform this was seen as unique. However, focusing on the number of funds available is no longer seen as a sufficient sales argument.

Customers increasingly want help sifting through the range. It is still broad, but Nordnet’s pitch is different.

For example, to help persuade potential new clients that want to move all their capital to Nordnet, the broader the range the greater the chance that they will do just that.

Maintaining a focus on a broad range also fits the company’s objectives of growing its overall services proposition for the 400,000 customers it serves in the Nordic region.”

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