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Comment by Joy Dunbar, Editor of Absolute UCITS
Since the development of absolute return UCITS funds, platforms
have been the most prominent way that hedge fund managers have
accessed investors outside their non-traditional core.
The benefits of using a platform—assuming all
platforms are born equal (which they are not)—are
clear. Platforms offer a portfolio manager a one-stop-shop
solution to distribute and market its funds.
The platform is usually legally in charge of the fund so it is
its responsibility to deal with the extensive regulations
surrounding the UCITS world.
These days, such managers may only have 'star
quality’ within the close-knit offshore sector, so
going onto a platform gives the portfolio manager the
opportunity to associate themselves with a strong brand.
But in addition to launching a UCITS fund solo or going via a
platform, this week saw another way of distributing an absolute
UCITS fund appear: the sub-advisory relationship.
Commodities trading advisor, Aspect Capital, which manages $6
billion assets, was appointed by Skandia Investment Group to
launch a managed futures UCITS fund (
see earlier story). The mutually beneficial sub-advisory
relationships with brand name managers are common in the retail
fund world where the expertise is lacking, but the distribution
channels are solid.
The Skandia Global Futures Fund could become the poster child
for managers wanting to create UCITS funds in new ways. Aspect
is not mentioned in the title of the fund and references to the
term hedge fund—which seems to scare the average
retail investor—are kept to a minimum in the
literature. Managed futures or futures are the terms used
SIG, one of the largest investors in the absolute return UCITS
space, has been one of the very few retail investment groups to
embrace hedge funds openly and has used many traditional
offshore managers, such as Odey Asset Management,
Liontrust Asset Management and Danske Capital, for
its Best Ideas funds.
In an uncertain investment environment offshore and onshore
alliances need to continue to ensure a greater choice of funds
have the potential to beat inflation and cash. Mixing the best
in asset management manufacturing and distribution seems like a
solid way forward.