Are Ucits hedge funds over-rated?
Hedge fund experts have questioned whether investor demand for Undertakings for Collective Investments in Transferable Securities (Ucits) hedge funds is misplaced.
At an Association of Investment Companies (AIC) round table on Wednesday Ana Haurie and Sean Molony emphasised the continued benefit of the listed hedge fund sector for investors over Ucits.
The experts said the hedge fund sector had a turbulent ride through the credit crunch and post Bernie Madoff.
It underperformed the investment company sector average over five years where it made a loss of four per cent compared to the average investment company making a gain of 23 per cent.
Hedge Fund Research (HFR) data shows that hedge fund assets peaked at $1.87 trillion in December 2007 (£1.97 trillion) and bottomed out to $1.41 trillion.
Hedge fund assets have since risen to $1.65 trillion at the end of the second quarter of 2010.
Ana Haurie, chief executive of Dexion Capital said there was an increased demand for Ucits amongst investors.
She said: "There is a premium in liquidity they want transparency and a regulatory overview of the environment in which they are investing.
"Out of this there is an increased demand in Ucits.
"Ucits are not new but investors demand for them is."
Ms Haurie said she was concerned about the way the Ucit sector was being marketed and sold to investors.
She said: "Just because they are regulated vehicles, that should not mean investors don't have the obligation to do due diligence.
"The Ucits stamp does not take away the risk to investors."
Sean Molony, senior investment specialist at Alternative Investment Strategies, said there was still interest in listed funds although there were fewer launches of listed hedge funds compared to Ucits hedge funds.
Mr Molony said not as many listed hedge funds were launching as there were high quality listed funds available on a discount already.
He said: "Most Ucits funds are very small so while there may be a lot of launches they are not raising that much in assets."