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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.