UCITS Listed Funds of Hedge Funds
UCITS III Funds Bested Listed Funds of Hedge Funds
A spate of wind-ups, two layers of fees and the arrival of competitive Ucits III funds are driving investors away from listed funds of hedge funds. The gravitational pull has become so strong that the sector is largely the preserve of arbitrageurs who are keen to “play” the sharp discounts the funds of hedge funds carry (their shares still trade at a 10-15 per cent discount to their net asset value) to make a quick profit, a clutch of industry watchers claim.
And as the variety of Ucits III funds – which make hedge fund strategies more accessible – multiplies, the utility of conventional closed-ended funds of hedge funds will diminish even more, argues Simon Elliott, head of investment trust research with Winterflood Securities.
“It’s not clear that investors still want listed funds of hedge funds,” says Mr Elliott. “We’re seeing that side of the market continue to contract. A few funds have already died and a few more will go this year.” Source