The latest issue from Opalesque UCITS Intelligence says UCITS absolute return funds basked in the glow of investor attention during 2013 as AUM grew by 34% to Eur 190B. Not only that, these alternative asset vehicles clocked a return of 4.12% during 2013, their best showing since 2009, helped no doubt by the bullish fervor in equities.

“With close to EUR 200 billion assets under management the UCITS absolute return market is now a major component of the European alternative investment market. The good results of 2013 coupled with the increase interest for highly regulated products will with no doubt further fuel the growth of this market in 2014,” said Louis Zanolin, Allx Capital.

UCITS aum

Key 2013 UCITS absolute return funds’ metrics

  • Long/short funds return 11.07%
  • Multi-strategy funds end higher by 5%
  • Event-driven managers gain 4.18%
  • Macro funds are up just 2.27%
  • Fixed income funds higher by 1.90%
  • Fund of funds return 4.27%, their best since 2008
  • Commodities, Volatility and FX funds get it on the chin and post results ranging from (-3.5%) to +4.2%

Fund flows

Total assets under management surged from 142B Eur to 190B Eur in 2013. As expected, the better-performing strategies benefited from greater inflows compared to those that were showing negative returns.

Again, the bigger funds seem to have been favored with higher flows from investors – the 10 largest funds garnered nearly 55% of total net new AUM – while smaller funds, particularly with less than 50M Eur had to struggle to grow assets.

“Investors are more and more appealed by the attractive risk return profile and strong regulatory oversight characterizing these funds. The strong performance of the 2013 UCITS Alternative Index (UAI) Award winners is an additional sign showing that the scale and quality of the funds in this universe is also improving,” commented Louis Zanolin, Allx Capital.

However, 2013 was notable also for being the first year since 2008 that the number of funds in the space fell compared to the previous year – down 6%.

Notable fund performance in 2013

  • Alceda’s ‘Promont-Europa 130/30’ mixed fund strategy fund, managed by Promont AM AG, returned 22.2%
  • Deutsche Bank’s ‘DB Platinum Omega’ equity hedge fund, managed by Omega Advisors, earned 23.31%
  • Lyxor’s ‘Lyxor Epsilon Global Trend Fund (April 2011)’ CTA fund, managed by Lyxor, grew 15.79%
  • Morgan Stanley Fund Logic’s ‘MS Algebris Global Financials UCITS Fund,’ a L/S equity fund managed by Algebris Investments (UK) LLP, returned 51.97%
  • Schroders ‘Schroder GAIA Sirios Equity, ’ an equity long short fund managed by Sirios Capital Management LP, 26.06%
  • Montlake’s ‘Montlake Pegasus UCITS Fund,’ an UK equity L/S fund managed by Clareville Capital Partners LLP, earned 46.81%.