Alternative UCITS Investors Focus On Global Strategies
Friday, January 20, 2012

Commodity Trading Advisers and Global Macro strategies are expected to be the biggest winners of new allocations to alternative UCITS funds, a new industry survey reveals.

According to the 5th quarterly edition ML Capital's Alternative UCITS Barometer, with 54% of respondents looking to increase their exposure to Global Macro-Discretionary, this strategy is currently the most popular among alternative UCITS investors.

There is also considerable demand this quarter for equity managers, with a preference for Global and US managers. Indeed all equity strategies have seen a rise in demand excluding Japanese and Latin American strategies, says ML Capital.

Global Emerging Long/Short is once again the preferred equity strategy this quarter with 52% of respondents looking to increase exposure. This is in sharp contrast with Latin American strategies, where it is noted that only 15% of investors were willing to increase their allocations.

The biggest losers this month are European Long/Short and UK Long/Short strategies. However ML Capital notes a stabilisation in the reduction of exposure to UK Long/Short and some respondents increasing their allocation for the first time in three quarters.

The Barometer is designed to help identify and anticipate key trends in the demand for the major strategies within the alternative UCITS sector and ML Capital surveyed 50 active investors in alternative investments, who collectively manage over EUR80bn and and invest upwards of EUR30bn of those assets into Alternative UCITS. Questions are aimed at discovering their forthcoming strategy allocations and the same respondents are questioned each quarter, in order to track asset flows between UCITS strategies.

John Lowry, Co-Founder and Chairman of ML Capital commented: “Investors are starting 2012 with a positive view and recognize the benefits of using alternative strategies in a volatile environment. Once you drill down, you are seeing a markedly changing Alternative UCITS landscape evolving, as evidenced from the latest Barometer results with demand shifting to some of the classic hedge fund strategies, Global Macro and Managed Futures balanced with a renewed interest in Global Emerging Markets strategies.”

Undertakings for Collective Investment in Transferable Securities, or UCITS, are formed under a set of EU directives that allow investment funds to distribute throughout the EU on the basis of a single authorization from one member state; UCITS III is the latest iteration of these directives.

Despite the focus on EU investors, UCITS III-compliant offerings are not limited to EU-located or domiciled hedge fund firms; in fact, firms across all regions have created investment vehicles which are compliant with the UCITS III standards. In some cases, firms are receiving UCITS III approval for existing fund vehicles, while in other cases, firms are launching new products which conform to UCITS III guidelines.