Alternative UCITS Strategies deliver strong start to 2013

Alternative UCITS funds have delivered a good start to 2013 with the sector growing in terms of number of funds as well as assets under management, according to the Alceda Quarterly UCITS Review, produced by leading independent structuring specialist Alceda Fund Management S.A. (“Alceda”).

Tracking the Absolute Hedge Global UCITS Index, the Alceda UCITS review revealed that the sector advanced 2.56 percent in the first quarter of 2013. Assets under management (“AUM”) in alternative UCITS funds stood at €96.6bn in March 2013, a 5.1 percent rise over the first quarter, including the addition of 11 new funds.

All Alternative UCITS strategies recorded positive performance in Q1 2013, making it one of the best quarters on record. Benefitting from strong equity markets in Q1, the Equity Long Short Index advanced 4.17 percent and was the best performing strategy index for the quarter, following a strong finish to 2012. The Multi-Asset Index, a recently added index developed to capture the exceptional growth and popularity of multi asset funds, also delivered a strong start to the year adding 3.19 percent as well as a 7.1 percent growth in AUM. The Macro Index saw the strongest AUM growth with an increase of 12.5 percent.

Managed Futures strategies delivered a 3.79 percent growth in the quarter, the first positive quarter in over two years. Despite this, the continued impact of recent European Securities and Markets Authority (ESMA) guidelines was evident with strategy assets declining by 15 percent in the quarter. FX strategies also saw assets decline with two funds closing, contributing to a 28.6 percent decline in AUM.

Luxembourg continues to have a firm grip on the alternative UCITS sector as the domicile of choice by number of funds, however the UK is the largest domicile by assets reflecting the importance of the market to alternative UCITS funds.

Michael Sanders, Chairman of the Board, Alceda Fund Management said:

“We are encouraged by the strong start to the year. With uncertainty in global markets remaining high, we believe that investors will continue to adopt UCITS structures. A recent investor survey supports this view, with the majority of polled investors planning to increase their allocation to alternative UCITS strategies in 2013."

“Several well known offshore hedge funds launched UCITS versions of their strategies in the first quarter, underlining the benefits of the UCITS structure, and further expanding the range of funds to choose from as investors are increasingly looking for absolute returns and portfolio diversification."

“However, UCITS hedge funds continue to trail their offshore counter-parts and we believe that this is due to alternative UCITS funds being a more conservative and lower volatility subset of offshore hedge funds.”