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Who can build it first?
13 September 2007
Extension products, such as 130/30, will revolutionise asset management alongside new UCITS investment guidelines in Europe. But who will win the race to service these new, flexible clients? It all depends how fast they can build, says Maria McGrady.
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130/30
ucits three
investment guidelines
custodians
prime brokers
Change is here! Hedge funds are no longer hedge funds, and asset managers are no longer asset managers. The former want to diversify their income and win institutional business; they need to find a more stable capital base and a way to ride out any rough times. The latter want to provide absolute returns, or at least absolute options; they are suffering from comparisons with hedge funds and the allegation that they charge alpha fees for beta returns. They also find it hard to hang on to quality staff.
Two trends are allowing both parties an opening. UCITS III, the third instalment of the European legislation on Undertakings for Collective Investment in Transferable Securities, has permitted asset managers greater flexibility in their investment. Any funds that comply with UCITS III can now short securities and engage in derivatives. Although UCITS III was proposed in July 1998, it was only adopted...
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