In the past decade, long/short equity has grown to be the most popular alternative UCITS strategy, while funds invested in emerging markets have had the greatest performance, according to a study from analytics software provider PerTrac.
PerTrac also says smaller funds outperform larger ones, based on a comparison of equal-weighted and asset-weighted cumulative returns on its Alternative UCITS Fund Index.
The findings are part of a report titled The Coming of Age of Alternative UCITS Funds, available here. PerTrac studied alternative UCITS performance from January 2002 through October 2011.
Alternative UCITS funds are pan-European investment vehicles that pursue hedge fund-like strategies, but are limited in leverage and the range of illiquid assets into which they can invest.
The study found that more than a quarter of the 1,210 alternative UCITS funds it tracks pursue long/short equity strategies. Global macro, CTA/managed futures and multi-strategy fund strategies each accounted for more than 11% of the funds. Just less than 11% of the funds followed a fixed-income strategy.
As for domicile, more than 80% of alternative UCITS funds are domiciled in Luxembourg (50%), Ireland (19%) and France (12%).
PerTrac says alternative UCITS funds have seen strong growth in assets under management, but have been marked by peaks and valleys since the European Parliament and the Council of 21 January 2002 first granted UCITS funds greater freedom to follow alternative strategies. Assets under management of alternative UCITS have grown from 5.4 billion in January 2002 to nearly 150 billion as of October 2011.
This study indicates that alternative UCITS funds are becoming more mainstream, says Lisa Corvese, managing director of global strategy at PerTrac. The turbulence of the last few years has compelled investors to seek out alternative investments with greater transparency, liquidity and risk controls. Based on a robust AuM growth since 2009, it would appear that alternative UCITS funds have increasingly become a solution of choice.
(CG)