Are UCITS funds the future in a hybrid asset management world?

Mon Jul 27, 2009

Everyone, it seems, is launching UCITS funds: hedge fund managers, traditional asset managers, even funds of funds. Are they just a short-term fad or the face of the future?

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 previous versions.

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...

ISSN: 2151-1845 / CDC10004H


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