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UCITS – the new brave world of Hedge Funds

The deeply interesting, if difficult and sophisticated Hedge Fund industry, is going through important changes. UCITS, the acronym for Undertakings for Collective Investment in Transferable Securities Directives, became the main staple for the industry in the European Union following the tremendous hard times of the 2007-2008 subprime Financial Crisis. I would like to join here with the Digital Edge a reproduction of a post in the Social Media Network LinkedIn Group discussion – UCITS for Hedge Funds – by connection Matthias Knab:

Founder of Opalesque, leading alternative investment news with 50,000+ readers

France is the second largest savings market in the world, right after the U.S. A real strength of the French market is the diversity of the industry and the number of entrepreneurial asset managers. Of the approximately 600 asset managers in France, two-thirds are small and medium sized, and some 30 asset managers are created and authorized each year. By the July 22nd 2014 deadline for implementing the AIFMD, the French regulator AMF expects to have 350 registered Alternative Investment Fund Managers (AIFMs.) in the country.

As a result of the Alternative Investment Fund Management Directive (AIFMD), most of the service providers have increased prices. Some smaller firms have decided to change service providers in order to react and cut costs. While European fund managers certainly appreciate the benefits of their European passport for cross-border marketing, tax issues remains as their most prominent concern, and probably the last hurdle to distribution in countries like the U.K. and Germany. Nevertheless, over time AIFs could potentially become as popular as UCITS both inside and outside of Europe.

Investors should be aware that European hedge fund managers don’t just only launch UCITS or Alternative Investment Funds (AIFs): according to ERAAM, European single hedge fund managers also launched 83 Cayman funds in 2013. However 89% of the AUM was within nine funds – certainly a very high concentration. New investor groups like U.S. based pension funds and others have started to discover European opportunities, offered by European managers, in sectors as diverse as:

– European equities
– European corporate credit and loans
– New fields like financial credit or in the management of liquidity buffers (HQLA)
– Smart Beta 2.0
– Securitization
– European distressed
– Investments with longer durations like real estate, infrastructure and infrastructure debt.

The Opalesque 2014 France Roundtable discusses those opportunities in-depth. The Roundtable was sponsored by Lyxor and Eurex and took place June 3rd 2014 at the Paris office of Lyxor with:

1. Natasha Cazenave, Head of the Asset Management Regulation Division, AMF
2. Denis Beaudoin, CEO, Finaltis
3. Olivier Kintgen, CIO, Eraam
4. Antoine Rolland, CEO, New Alpha Asset Management
5. Fabrice Dumonteil, CEO, Eiffel Investment Group
6. Paul Beck, Executive Director, Eurex / Deutsche Boerse Group
7. Christophe Baurand, Head of Alternative Investments, Lyxor Asset Management

The participants also discussed:

– What are the two opportunities European incubators see coming out of regulations?
– Why do European incubators love Asian managers?
– Who is driving the strong momentum of UCITS funds?
– What is the opportunity in long-term and SME financing?
– How European Market Infrastructure Regulation (EMIR) can lead to less risk and reduced costs
– What is the road to success for an emerging manager? Which mistakes can be avoided?

Download here for free: http://www.opalesque.com/RT/RoundtableFrance2014.html

Paris Roundtable discussed investment opportunities in Europe, fund launches from European hedge funds, how emerging managers can succeed, and important regulatory developments.

Matthias is Senior editor of publication Opalesque, which is a leading magazine about Alternative Investments.

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