It may seem antithetical to the spirit of the hedge fund
industry that the hottest new hedge fund-type investment
products are based onshore, do not require big up-front
investments and can be sold to the person on the street.
Peter Harrison and Doug Shaw
But that is precisely what has been happening thanks to UCITS
III, the third version of the Undertakings for Collective
Investment in Transferrable Securities (UCITS), which allows
for a much broader range of investment strategies than its
Simply put, the UCITS framework allows onshore and even
retail investors to gain access to products that can go short
and use leverage synthetically and to use cash actively as part
of the overall investment toolkit.
But sophisticated UCITS III products also limit leverage,
set the maximum redemption period to 14 days, carry tougher
counterparty risk exposure limits and require more disclosure
of information, much more...