UCITS III funds to surge by more than USD185 billion in a year, says DB survey

Date: Wednesday, February 9, 2011
Author: Wendy.Chothia, Hedgeweek.com

Investors expect more than USD185 billion to flow into UCITS III absolute return funds in the next twelve months, according to a Deutsche Bank survey of the industry. Using current estimates that USD140 billion is under management in UCITS III absolute return funds, the survey indicates the size of the sector will double in the year ahead.

The survey, conducted by the Deutsche Bank Hedge Fund Capital Group, indicates the industry will grow significantly, with allocations to all UCITS strategies remaining high. The bank surveyed 184 investor entities, representing more than USD2.1 trillion in assets. These wealth managers, insurance companies, fund of funds, family offices and high net worth individuals on average expect to have more than a fifth of their total investments in UCITS III compliant funds by 2013.

UCITS III absolute return funds deliver absolute return strategies within the UCITS III regulatory framework, which dictate that funds need to be liquid, transparent and “passportable” across Europe.

"UCITS III is changing the way investors may gain exposure to the alternatives industry, says Anita Nemes (pictured), global head of capital introduction."Investors not only want to be able to invest in hedge funds, but some of them want to do it in a liquid and transparent way, that has the added benefit of regulatory oversight."

“The outlook for the UCITS III absolute return industry is bullish,” said Daniel Caplan, European head of global prime finance sales and alternative UCITS distribution. “The survey results confirm our experience that these products are appealing to investors, especially the larger institutional players. If the existing funds perform and we continue to see high quality product launches, then inflows could double in the next twelve months.”

Deutsche Bank’s Hedge Fund Capital Group is a global team of specialists with offices in London, New York, Hong Kong, Tokyo and Sydney. The primary role of the group is to provide capital introduction services to Deutsche Bank’s hedge fund clients. The group also acts as a strategic advisor, assisting hedge funds and investors learn more about industry trends.