Ucits absolute return funds outperform hedge funds

Ucits compliant absolute return funds have outperformed hedge funds over the past five years, according to a study conducted by independent asset manager Lupus Alpha.

The research, conducted among a universe of 564 alternative absolute return funds, revealed that over a five-year time period, Ucits regulated absolute return funds offered an average return of 2.72% per year, whereas hedge funds lost an average of -0.46% per year.

Over a one-year time scale, the picture was even gloomier with less than 30% of funds offering positive returns, ironically due to the high level of volatility at the beginning of the year. Added to that was a relatively high level of European equity exposure among most funds, which further dragged down performance throughout 2016.

Overall, absolute return funds offered an average return of -3.55% over the past five years, with unregulated hedge fund vehicles at the bottom-end of the scale, offering -5.63%. However, they still outperformed the European equity universe, with the Euro Stoxx 50 index falling by -13.89% throughout the same period.

Independent of average returns, the survey concluded that profitability varied greatly depending on the provider, with some asset managers offering returns of 20.56% over the past years, while others reported losses of -23.63%.

Ralf Lochmüller, founding partner and spokesperson for Lupus Alpha comments: “The performance of individual absolute return funds can vary greatly, we have noticed clear difference in terms of quality. Our research highlight that manager selection should remain a key priority for investors in order to achieve stable returns independent of the market phase.”


Mona Dohle
Mona Dohle speaks German and Dutch, she is DACH & Benelux Correspondent for InvestmentEurope. Prior to that, she worked as a journalist in Egypt and Palestine. She started her career as a journalist working for a local German newspaper. Mona graduated with an MSc in Development Studies from SOAS and has completed the CISI Certificate in International Wealth and Investment Management.

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