London, April 6, 2011 - Globally, absolute return UCITS funds are growing exponentially with assets under management trebling during 2010. Assets under management in single-manager absolute return UCITS funds stood at $30.3 billion at the end of 31 December 2009 – and increased by 198% to $90.5 billion at the same point a year later.
The growth of assets under management comes both from hedge fund groups launching onshore products and in funds from the traditional long-only asset managers using absolute return strategies within the UCITS wrapper such as the M&G Optimal Income Fund, the JB BF Absolute Return Bond Fund and the Global Absolute Return Strategies Fund managed by Standard Life Investments.
In addition, $9.5 billion raised globally in 2010 from 129 new fund launches.
The absolute return UCITS industry is still in its infancy and appears to be developing at a similar pace to the European hedge fund industry in its formative years about a decade ago.
Back in 2002, around 180 new European hedge funds were launched raising combined assets approaching $9 billion, almost mirroring the equivalent absolute return UCITS figures for 2010. The European offshore sector currently has $423 billion assets under management, according to the latest survey from EuroHedge, which indicates the potential scope for growth.
Joy Dunbar, editor of Absolute UCITS, says: “The development of absolute return UCITS funds has been incredible. So far the sector is showing the same signs of growth as the offshore European industry in the early part of the last decade. Our research also suggests that this is set to continue well into the next decade.”
To date, the UK has more than half of global absolute return UCITS, at $48.3 billion, and half of the managers as well – mainly located in London.
Three quarters of absolute return UCITS funds are ‘standalone’ funds (without any offshore hedge fund counterpart) with the rest being offshore ‘clones’ (see chart below).
Dunbar adds: “The surprisingly low proportion of clones shows that absolute return UCITS are developing a life of their own.”
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