A New Environment for Hedge Funds:
Adopting the UCITS kitemark
Old dogs can learn new tricks. As
the investment landscape evolves
a number of alternative investment
managers are beginning to launch
new, regulated funds and initiate
transfers using either Dublin- or
Some are even looking to
re-domicile existing funds to Dublin
Many leading names have launched
new UCITS – Undertakings for
Collective Investments in
Transferable Securities – based
funds which makes them on a
regulatory par with more
traditional, and accessible,
European vehicles. Among the
firms to have taken this approach
are: Brevan Howard, GLG Partners
and Odey Asset Management.
Other alternative investment
managers are preparing to launch
new onshore funds using the more
lightly regulated route of either the
Qualifying Investor Fund (QIF)
model permitted in Ireland or the
Specialised Investment Fund (SIF)
structure developed in Luxembourg.
Both offer much the same
investment flexibility that is
available to a Cayman Islands,
Bermudian or British Virgin Islands
(BVI) fund – but employ an onshore
regulatory framework. This can
provide access to a new client base.
What has sparked this move?
There are two drivers at work:
1. In 2008, total hedge fund assets
fell by almost a third in the second
half of the year to US$1.8 trillion
(down from US$2.7 trillion) while
the number of firms comprising
the Billion Dollar Club fell from 395
to 311 (HedgeFund Intelligence, 5
March 2009). Many funds could
not retrieve assets caught up in
the Lehman collapse. Many more
introduced redemption ‘gates’.
By Citi’s Richard Ernesti, Global Head of Client and Sales Management for Investors, Global Transaction Services, and
William Potts, Sales Director, Prime Finance.
Now investors are looking
to improve their portfolio
diversification while hedge
funds are looking to secure
the assets of new investors.
2. The Madoff scandal lead
investors to demand more