Funds Hub

Money managers under the microscope

Lipper: Fighting fragmentation

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By Merieme Boutayeb, Research Analyst at Lipper. The views expressed are her own.

The European investment funds industry has been reshaped over the last 25 years by EU directives designed to improve efficiency, strengthen competitiveness and boost distribution. However, the latest battle to reduce fragmentation of the industry is looking like a hard one to win.

The first UCITS (Undertakings for Collective Investment in Transferable Securities) directive was created in 1985 with the aim to lay the foundations for a single European retail market.

Faced with regulatory gaps and other flaws, it had only limited success and a second attempt was initiated in the early 1990s, only for that project to be aborted due to major disagreements between member states.

INSIDER-GLC launches two new UCITS strategies

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GLC CEO Caroline Hoare tells Reuters Insider the hedge fund plans to launch two new UCITS-compliant vehicles to draw in new investors.

A mixed picture

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Results from fund firms GAM and Jupiter this morning provide some interesting insights into the different drivers of the hedge fund industry.

GAM, which saw profits tumble last year as clients pulled out of its hedge funds, recorded net inflows into these portfolios for the first time in two years, showing that, despite market volatility and investor caution, there is money out there looking for a home and that a firm can still reverse its fortunes in this climate.

Can Ucits help the struggling fund of hedge funds industry?

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Funds of hedge funds have had a hard time since the onset of the credit crisis, what with the Madoff scandal, widespread gating and sidepockets and underperformance versus single-manager hedge funds in 2008 and 2009.

However, Ucits — onshore funds viewed as more transparent and more liquid — have been widely seen as a fresh injection of capital into the hedge fund industry and could prove a much-needed boost for funds of funds looking for a new client base to tap.

UCITS IV Everyone

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It is early days at the Reuters fund summit in Luxembourg, but already a few themes are building. For one thing, no one seems to be too negative about the investment climate.

For the most part, however, the attendees are focused on how the industry will recuperate from the battering it has suffered during the financial crisis. Again, there appears to be a degree of optimism. Most of the talk is about UCITS IV, which is fundspeak for a new kind of pan-European fund that is easier to distribute.

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