- European equity strategies dominate UCITS platforms by strategy – indicating that other strategies are still under-represented
- Asian and US fund managers are responding to investor demand to launch UCITS funds and are using platforms as an entry point into the European market
- Platforms offer hedge fund managers access to investors outside their traditional institutional investor base
- Platforms are expected to grow in line with the wider absolute return UCITS sector
London, 4 January 2012 – Assets on platforms account for about $9 billion at the end of June, representing 8% of the entire absolute return UCITS sector which comprised $116 billion at the same point.
Platforms designed to facilitate the launch, distribution and management of UCITS funds are typically offered by investment banks or established fund management companies, although there are also now a number of independent players. Platforms are particularly attractive to hedge funds that do not have extensive distribution networks and infrastructure teams of their own. All the existing ones are domiciled in either Ireland or Luxembourg, with the exception of German-domiciled Universal Investments (UI). The majority of these UCITS platforms were launched in the aftermath the global financial crisis in 2008.
Since inception, the platform industry has developed into a one-stop-shop solution, offering traditional offshore alpha generators access to fund governance, administration and custody services. Most platforms also offer capital raising capabilities.
Absolute UCITS, part of HedgeFund Intelligence, undertook the most comprehensive survey of the platform UCITS industry at the midpoint of 2011.
There have been a number of notable recent platform launches – including from Goldman Sachs and Lyxor Asset Management – and other financial services firms are planning on unveiling similar offerings next year.
Most platform service providers have their main offices or a significant presence in London – again with the exception of Frankfurt-based UI. The largest UCITS platforms, by assets, are investment banks Merrill Lynch Investment Services (MLIS) and Deutsche Bank Platinum, followed by asset manager platforms Alceda and Schroder GAIA.
UCITS platforms ranked by absolute return assets
All of the top five platforms, by assets, also have an absolute return UCITS fund represented in the top five flagship funds on a platform.
The largest fund on a platform is DB Platinum IV dbX Systematic Alpha Index Fund – a CTA strategy that uses Winton’s Diversified Trading Program. It had assets under management of $1.3 billion at the end of June.
Aquila Capital’s AC Risk Parity 7 Vol Fund – a $1.1 billion strategy that sits on the Aquila-owned Alceda platform – is the only other UCITS fund on a platform that had assets of more than $1 billion at June 2011. Together with a more high-vol version, the strategy had total assets of $1.5 billion.
The third-largest fund is the MLIS York Event-Driven UCITS Fund, which had assets of $970 million and is the largest fund on the MLIS platform.
Joy Dunbar, Editor of Absolute UCITS, comments: “UCITS platforms have become a valuable tool for fund managers who want to diversify their investor bases but do not have significant distribution networks or European-based offices. We are sure that many more will follow in seeing platforms as way of gaining an edge in an increasingly competitive environment for asset raising.
“It will be interesting to see how service providers who did not launch a platform develop their offerings in response to the growing absolute return UCITS space.”
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