UCITS assets grew thanks to big traditional brands having strong distribution networks and capacities, according to Opalesque.
Opalesque’s recent report on UCITS, however, reveals the number of funds is stagnating despite witnessing growth in the AUM.
As reported earlier, UCITS funds have gained popularity in recent years, and investors have flocked to these alternative investment strategy vehicles in search of higher liquidity and transparency.
Merrill Lynch leads in terms of AUM
Opalesque’s data partner Alix Capital observed Morgan Stanley (NYSE:MS) and its Fundlogic platform witnessed strong growth during Q2-Q3 2013.
Alix Capital’s data reveals that while the number of funds is stagnating, the assets are growing. This is evident from the following graph:
As the following graph highlights, Morgan Stanley (NYSE:MS) leads in terms of largest platforms by number of funds as of the third quarter of 2013:
However, when AUM is considered, Merrill Lynch tops the list with an AUM of 2.048 billion Euros, followed by Schroder GAIA with 1.810 billion euros.
With institutionalization of the UCITS market, big brands are able to attract more funds. Interestingly, the report reveals small funds under $15 million closed down.
Opalesque’s recent report also reveals the development of UCITS since 2008 has progressively impacted the business models of hedge funds. For instance, P. Schoenfeld Asset Management: “PSAM”s UCITS assets have nearly doubled year to date.”
Brand is a key element in UCITS industry
Opalesque’s recent report also highlights some of the interviews held with leaders in the UCITS industry.
In his interview, Daniel Capocci, senior investment manager in charge of absolute return of UCITS investments at Architas Multi-Manager, the dedicated multi-manager arm for retail products at AXA points out he would consider funds between €50 and €100 million, provided he anticipates the funds to grow rapidly or if the manager has larger funds and/or existing offshore funds with a large asset base.
He points out that the world has changed over the last decade and even in the hedge fund world, there is not a lot of room for very small players anymore.
He emphasizes that today, brand is an important element for certain distribution channels, particularly in Europe.
U.S. throws large opportunities
Emmanuel Terraz, fund manager at Dexia Index Arbitrage Fund, believes market opportunities are larger in the U.S. because of the size of the markets and large market players such as pension funds rebalancing their portfolios.
Opalesque’s recent report also quotes Massimo Tosato, CEO of Schroder Investment Management Ltd, London as saying the introduction of the AIFM Directive will lead to some of the more complex products being transferred from UCITS to AIFMs.