Are Hedge-Fund UCITS the Cure-All?

Are Hedge-Fund UCITS the Cure-All? — March 2010

1. Presentation of the EDHEC Risk Survey

In general, the survey suggests that institutional investors bound by quantitative restrictions will ask fund managers and distributors to repackage hedge fund strategies as UCITS. For their part, managers of alternative funds are concerned by the uncertainties surrounding the AIFM directive and may consider packaging their strategies as UCITS for better distribution. Most respondents, however, fear that structuring hedge fund strategies as UCITS will distort strategies and diminish returns. In addition, hedge-fund UCITS pose operational problems. Respondents are concerned by the opacity of local obligations and of the responsibilities of depositaries, by the difficulty of validating the valuation process, by the cost of depositary services for hedge fund strategies, and by due-diligence obligations.

Figure 2: Assets under management

12.7% Less than D 100mn 10.2% Less than D 500mn 9.4% Less than D 1bn

16.5% Between D 1bn and D 5bn 5.6% Between D 5bn and D 10bn 14% Between D 10bn and D 50bn 8.1% Between D 50bn and D 100bn 23.6% More than D 100bn

Figure 3: Country in which your firm is registered (all respondents) Continental Europe is naturally predominant (“Other European” includes Italian asset management firms as well as many pension funds located in the Netherlands or Northern Europe).

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25

12.4% France 7.3% Luxembourg 4.8% Ireland 29.5% United Kingdom 3.7% Germany 13.7% Switzerland 5.7% United States of America

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2.7% Cayman Islands, Caribbean, Bahamas or Bermuda 1.8% Channel Islands, Isle of Man, Malta or Cyprus 16.9% Other European 1.4% Other non-European

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An EDHEC Risk Institute Publication