David Miller, Partner at Cheviot Asset Management, a major investor in hedge funds for private clients, has launched a critique on UCITS funds and will be addressing the GAIM 2011 conference on Thursday in more details.
He emphasizes the point that low risk UCITS are not what investors need right now.
A lot of marketing is pitching UCITS as a low risk way into hedge funds, says Miller. However, this is really not what investors need and with inflation at a higher level than forecast, investors in many UCITS funds are actually suffering a decline in the real value of their wealth. Fund managers need to be more ambitious about performance and must focus on real returns after inflation. Returns of 6-7% with low volatility will not achieve this objective and yet this is where many UCITS funds are targeted.
Miller will be joining a working group for a discussion on whether UCITS are the way forward for the alternatives industry, and whether offshore funds are set to become a thing of the past.
UCITS is not a European kitemark of quality although many seem to think so, adds Miller. Investors still need to carry out due diligence. UCITS can be more expensive than the headline number because of extras such as higher prime brokerage fees, and marketing costs. The advantages of UCITS funds are well known offering better liquidity when compared to offshore Cayman funds and a favourable tax treatment for UK investors.
In a thirty-year career Miller has worked for some of the biggest players in the market; including JP Morgan as Managing Director, and the Royal Bank of Canada, where he was head of British Isles Investment.
Since 2007 he has been a Partner at Cheviot Asset Management, one of the largest independently owned investment firms whose assets have doubled to 3.5bn since the credit crunch began in 2008.
For Global Custodians full coverage of the GAIM 2011 conference in Monaco this week, please click here to see all stories.(LB)