UCITS fund of funds: An industry at a crossroads?

Wed Apr 18, 2012



Joy Dunbar, Editor of Absolute UCITS, explores the state of the UCITS fund of fund sector


Worldwide assets in alternative UCITS fund of funds increased marginally in 2011, according to new research from the Absolute UCITS research and data team.

In an extremely difficult year for the industry - which was triggered by the escalating Eurozone economic and financial crisis - difficulties with performance clearly took a heavy toll on investor confidence.
 
This resulted in assets under management increasing by only around $500 million during the year and the number of funds increased by just two to reach 50.


Performance

Following a difficult period, which started in August 2011 when the US was downgraded by a credit ratings agency which resulted in much ensuing market volatility, around 11 UCITS fund of funds were liquidated - some within only a year of launch. Most funds in the sector, like most underlying funds, were down.

Returns of UCITS fund of funds have hence not been very attractive in the past...

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