Hedge fund / mutual fund convergence in Europe and the US seen to “mirror” each other
| Sep 22nd, 2009 | Filed under: Academic Research, Hedge Fund Industry Trends, Today's Post | By: Alpha Male |
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As regular readers of AllAboutAlpha.com know, one needs to look beyond superficial labels such as “hedge fund” and “mutual fund” in order to understand the shifting asset management landscape. As we like to say, it’s not about “hedge funds” or “mutual funds”, it’s all about alpha.
So we were very interested to read about this issue from a legal perspective on an excellent website called The Hedge Fund Law Report. The site produces mainly in-depth articles and is subscription-only. However, we are pleased to reproduce in its entirety, a recent article that illustrates how evolving European mutual fund regulations are fuelling the convergence of hedge funds and mutual funds.
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[...] all about alpha Undertakings for Collective Investment in Transferable Securities (UCITS) – retail investment funds authorized by one of the member states of the European Union (EU) and thereby passported into the rest of the EU – represent the dominant platform for retail investment funds in Europe. See “UCITS: An Opportunity for Hedge Fund Managers,” The Hedge Fund Law Report, Vol. 2, No. 27 (Jul. 8, 2009). Collins Stewart, a London-based financial advisory group, recently announced that it plans to launch a fund of funds within the UCITS structure. This announcement, and a similar announcement from Schroders PLC that it is working with hedge fund managers to launch a range of UCITS funds for sophisticated investors, serve as evidence of the increasing convergence of hedge fund strategies and the UCITS structure. The convergence mirrors a similar trend in the U.S. in which hedge fund strategies are being offered in mutual fund or exchange-traded fund vehicles. These trends on both sides of the Atlantic are part of a more overarching trend toward retailization of hedge fund strategies, which heretofore have been the exclusive province of high net worth individuals and sophisticated institutional investors. [...]