How the hedge fund managed accounts industry has impacted the attractiveness of "Newcits" - Jason Bibb

19 July 2010

Jason Bibb, Global Head of Business Development, Apex Fund Services Holdings Ltd. provides insight as to how the hedge fund managed accounts industry has impacted the attractiveness of UCITS funds that cater for hedge fund strategies - better known as "Newcits".

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Fund distributors forecast growing demand for 'Newcits', despite expecting the regulated version of hedge funds to be more expensive and poorer performing than their offshore counterparts.

The big question for 'Newcits' is whether they will attract excessive regulation thereby restricting potential advantages for investors. There does appear to be a general consensus that more investor education will be imperative if 'Newcits' funds are to succeed.

Clearly, there has been euphoria recently for Ucits III funds and, everything considered, the market understands the merits of having such a product. But, there is a flip side: that those launching Ucits III funds must be able to highlight a balanced view of what the upsides, as well as the potential downsides, may be - in particular, investment restrictions and the impact to investment performance.

Until there is some certainty as to the new regulation, distributors will always be conscious of offshore risk. However, this should not be a limiting factor when considering offshore funds as, for example, an offshore fund can be redomiciled from an offshore centre to an onshore centre within a matter of a few weeks and the cost of doing so is generally not high relative to the size of assets in the fund. Therefore, there are always options open to offshore funds.

 

 

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