A more tangible by-product of the combined limitations on the
UCITS hedge fund space has been the disappointingly subdued
activity in the market for UCITS-compliant funds of funds.
A year or so ago, the general consensus among managers
appeared to be that the prospects for the funds of funds
(FoHFs) market were bright. As Thames River commented in a
newsletter published last November, "taking into account the
variety of investment and trading styles [eg. systematic,
discretionary, shorter-term, longer-term], the universe now
exhibits sufficient depth to allow the construction of
appealing and robust multi-manager portfolios".
On the surface, the figures tracking the growth of this part
of the UCITS market look reasonable enough. The number of UCITS
funds of hedge funds rose by 148% in 2010 – from 23 to
57 – with assets under management increasing by almost
200% to €2.6 billion.
That, however, remains...