Alternative UCITs Growing At Phenomenal Pace In Europe

Alternative UCITs Growing At Phenomenal Pace In Europe

European hedge funds could be major beneficiaries of expected volatility, with some 52% of respondents to a recent ML Capital Asset Management survey saying they are planning on raising exposure to the alternative asset category.


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Trend in UCITs Growing

The 13th edition of the quarterly ML Capital Alternative UCITS Barometer, published in the Opalesque UCITS publication, polled 60 institutional investors who collectively manage almost $95 billion “and today invest upwards of $20 billion into Alternative UCITS reflecting the widening of the investor base for regulated alternative products in Europe.” Those respondents range from insurance and pension funds to private banking institutions and financial advisers.

“Hedge funds managed to navigate very choppy waters over the first three months of 2014 and as a whole, posted solid gains for the first quarter,” the report noted.  The 52% of respondents planning on increasing their UCITs allocation is up from 30% just nine months ago and up from 20% throughout 2012.

Market neutral funds in vogue

Market neutral funds, such as relative value plays that engage in long / short strategies, appear in the spotlight in the report.  “With volatility expected, there is a strong demand for market neutral managers in order to moderate drawdowns, with 48% of investors looking to increase their allocations to the strategy,” said John Lowry, Co -Founder & CIO of ML Capital.

The most uncorrelated strategies are often found in managed futures, which had difficult performance in the UCITs category which was offset by stronger fixed income performance, the report noted.

Small number of funds generate majority of asset flow


The Opalesque UCITs publication report also noted that total assets managed UCITs absolute return funds grew twice as fast as the global market during the first quarter of 2014. As in the US, the growth can be explained in large part by a small number of funds.  According to the report, “the Schroder GAIA Sirios US Equity and the MLIS Marshall Wace TOPS UCITs that collected respectively USD 1899 million and EUR 588 million in Q1 2014. In total 10 platform funds increased their assets under management by more than EUR 100 million during the period.”

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Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)

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