Citi has launched an end-to-end service for EU domiciled hedge funds. The service includes prime finance, custody, middle office support, fund administration, corporate secretarial services, distribution support, fiduciary services and compliance monitoring.
Speaking to GlobalCustodian.com, Citi’s Andrew Gelb, Head of Securities and Fund Services in Europe, Middle East & Africa explained that the product was launched due to the rising wave of interest in these kinds of structures.
The new product aims to provide full suite of services required to support the industry demand for both UCITS and non-UCITS structures. According to KdK Asset Management, 80% of established fund of hedge fund providers intend to launch some form of UCITS-investing vehicle over 2010.
However the survey, highlighted in the Financial Times, also stated that these new investment vehicles will have higher costs and lower returns.
According to Gelb: It shouldnt fundamentally alter the cost dynamics. There may be a few additional items you may have to pay for, but is it a fundamental change? No, I dont think so.
Gelb is confident that Citi can make the most of the potential increase in demand. There are very few institutions that have the range of capabilities we have, he said. And certainly when you look across custody and fund administration, and the prime brokerage services, you would be talking about one or two institutions that have that full suite of products.
Gelb also confirmed that the new service has a number of clients on board: We have worked with clients on a full range of services, so we have re-domiciled clients in the EU. We can deal with any size of fund.
The launch also continues Citi CEO Vikram Pandits pledge that a third of Citis revenue will come from the banks Global Transaction Services unit over the next three to four years. We are expanding GTS and this is part of that expansion, says Gelb.