UCITS hedge funds: German investors find a way to access offshore hedge funds strategies
Thu Mar 3, 2011
Investing in absolute return products has been increasing in Germany over the past few years. Joy Dunbar, editor of Absolute UCITS, investigates why more Germans are investing in UCITS hedge funds.
German investors are traditionally perceived to prefer ‘safer’ investments like bonds and to shun volatile equities.
In the last decade the world has experienced two of the worst ever stock market crashes, and the safe havens of government bonds have also been undermined by the threats of the Irish and Greek governments defaulting on their loans which has created greater economic uncertainty.
However, restrictions imposed by the German local financial regulator, BaFin, mean that investors have found it challenging to invest in offshore hedge funds.
Changing European legislation means that certain hedge fund strategies that were traditionally only available to offshore investors are now available to retail and institutional German investors via the UCITS wrapper.
This has created opportunities for the absolute return or UCITS hedge industry in Germany and is demonstrated by both the increased number of absolute return funds available to investors and by their assets under management....
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