UCITS funds enjoy new allocation growth
17 October 2016 Frankfurt
Image: Shutterstock
The plethora of regulatory burdens confining the investment strategies of alternative UCITS are not dissuading investors from increasing their allocation to the fund type, according to a Deutsche Bank survey.
Deutsche Bank’s Hedge Fund Capital Group’s 2016 Alternative UCITS Survey found that 70 percent of the 130 institutional investors surveyed currently allocate to UCITS funds and a further 5 percent are committed to investing in the product by the end of the year.
The survey, which was conducted between July and September, also found that two thirds of alternative UCITS investors plan to increase their allocation to UCITS in 2016.
Demand for the highly regulated UCITS products is largely driven from the bottom, according to respondents, with 58 percent reporting that their underlying clients were the ones pushing for UCITS allocations.
These funds are unable to commit to term trades, which are becoming an increasingly prominent feature of the market, as well as facing limitations to their repo and reverse repo activities.
Anita Nemes, head of the hedge fund capital group and hedge fund consulting at Deutsche Bank, said: “Total assets managed by alternative UCITS funds have grown by 26 percent annually since the 2008 global financial crisis to reach close to €400 billion. Our survey results suggest that growth is set to continue, with two thirds of alternative UCITS respondents expecting to increase their allocations this year.”
She added: “We are also seeing a growing number of hedge fund clients embrace UCITS as a growth strategy for their businesses, leading to an increase in new interesting fund launches.”
When looking at UCITS investment strategies, the survey found that systematic equity market neutral and fundamental equity market neutral are the most sought after.
By region, the US and Canada are the most attractive for investment, according to respondents.
Deutsche Bank’s Hedge Fund Capital Group’s 2016 Alternative UCITS Survey found that 70 percent of the 130 institutional investors surveyed currently allocate to UCITS funds and a further 5 percent are committed to investing in the product by the end of the year.
The survey, which was conducted between July and September, also found that two thirds of alternative UCITS investors plan to increase their allocation to UCITS in 2016.
Demand for the highly regulated UCITS products is largely driven from the bottom, according to respondents, with 58 percent reporting that their underlying clients were the ones pushing for UCITS allocations.
These funds are unable to commit to term trades, which are becoming an increasingly prominent feature of the market, as well as facing limitations to their repo and reverse repo activities.
Anita Nemes, head of the hedge fund capital group and hedge fund consulting at Deutsche Bank, said: “Total assets managed by alternative UCITS funds have grown by 26 percent annually since the 2008 global financial crisis to reach close to €400 billion. Our survey results suggest that growth is set to continue, with two thirds of alternative UCITS respondents expecting to increase their allocations this year.”
She added: “We are also seeing a growing number of hedge fund clients embrace UCITS as a growth strategy for their businesses, leading to an increase in new interesting fund launches.”
When looking at UCITS investment strategies, the survey found that systematic equity market neutral and fundamental equity market neutral are the most sought after.
By region, the US and Canada are the most attractive for investment, according to respondents.
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