Are Hedge-Fund UCITS the Cure-All?

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

2. Context: A Muddled Regulatory Agenda Encourages Structuring HF Strategies As UCITS

PricewaterhouseCoopers (2008) notes that, although all UCITS funds are sold extensively to institutional investors, sophisticated UCITS are very much sold to international investors (indeed, the number of such funds sold to non-EU investors is greater than that sold to EU investors). 2.4 Towards a Wave of Hedge-Fund UCITS The attitudes of respondents suggest that a wave of hedge-fund UCITS, with both supply and demand as its impetus, will take shape. Slightly more than 60% of investors in investment funds plan to some extent to ask promoters or managers to restructure HF strategies as UCITS; likewise, figure 15 shows that 70% of fund managers plan to restructure their strategies as UCITS.

Figure 15: Do you envisage restructuring your own strategies under the UCITS regulation? (AIFMs)

18.2% Not at all 42.6% Somewhat 26.8% Very much so 12.4% I don't know

The attitudes of institutional investors depend on whether they are subject to investment restrictions. Most pension funds, generally exempt from investment restrictions, show no interest in having hedge fund strategies packaged as UCITS (figure 16a). Insurance companies (fig. 16b), by contrast, are subject to investment restrictions and plan to ask promoters or managers to restructure their funds as UCITS.

Figure 14: Do you envisage asking promoters to restructure their hedge fund strategies as UCITS? (investors only)

Figure 16a: Do you envisage asking promoters/managers to restructure HF strategies as UCITS? (pension funds)

28.4% Not at all 37% Somewhat 25.9% Very much so 8.6% I don't know

56.3% Not at all 18.8% Somewhat 25% Very much so 0% I don't know

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