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fees in focus as alternative ucits top 100bn

Funds with low fees account for three-quarters of assets under management in the alternative Ucits sector, indicating costs are a key consideration for “hedge fund-lite” investors


Alceda Fund Management’s alternative Ucits review for Q2 2013 shows that the 49% of strategies which have institutional share class annual management charges of 0.5%-1% control 74% of assets in the sector.

Similarly, investors favour products without performance fees. While 62% of alternative funds charge a 20% performance levy, such strategies account for less than a third of overall assets.

The findings were announced as the sector passed €100bn in assets under management for the first time, having grown from €96.6bn in March to €104.6bn at the end of June. Alternative credit strategies proved particularly popular during the period, increasing their assets by €3.4bn.

“With continued uncertainty in global markets, investors are looking to alternative Ucits for diversifying strategies, increased transparency, less volatility in weak markets and improved liquidity,” wrote Michael Sanders, chairman of the board at Alceda Fund Management.

“As the sector continues to mature and funds continue to build on their track records, we believe that more investors will continue to enter this market.”

Sanders’ views echo those of a study by data provider Preqin. As Expert Investor Europe reported last month, Preqin forecast growing appetite for Ucits-structured hedge funds over the next 12 months, despite the tendency of such strategies to underperform their offshore counterparts.