UCITS platforms come of age

Fri Feb 3, 2012

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Comment by Joy Dunbar, Editor of Absolute UCITS


The first mover in any new market has an inherent an advantage. The UCITS platform space this is no different. In the past few years more than 10 UCITS platforms have sprung up – launched by investment banks, asset managers or independent players – with varying degrees of success. But more investment banks and asset managers are expected to launch platforms this year offering more fund managers the chance to advise sub-funds.

One particular financial services firm, which previously stated it would not launch a platform because it did not see the opportunities in the alternative UCITS space, is now expected to launch later this year. Why the change of heart? And, more importantly, why are yet more UCITS platforms still being launched? The answer to both questions is that there are still compelling opportunities in the alternative UCITS sector, that fund managers still want to launch more UCITS funds – and they want help with distribution.

Investors also like the advantages of alternative UCITS funds which are being aided by the evolving investment landscape. Another factor is that alternative UCITS are no longer new and are becoming an integral part of the global investment landscape with an increasingly significant number of sub-advisers hailing from the US.

In the case of investment banks that do not yet have a platform offering, many now realise that their lunch is being eaten by their competitors who do. These firms are either launching a platform themselves or developing services to the growing alternative UCITS sector.

At the same time, asset managers with strong distribution channels recognise there is an opportunity to gather assets and earn fees from them. 

Consolidation or contraction often follows in a rapidly growing sector – and it is likely UCITS platforms will soon also start to liquidate some funds, especially those with poorly performing sub-funds which therefore can’t gather assets that reach a critical mass. But the strongest and fittest will survive, regardless when they were launched.


 

ISSN: 2151-1845 / CDC10004H