UCITS Alternatives

Author:Mr Stephen Carty
Profession:Dillon Eustace
 
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Introduction

2009 saw a significant increase in the number of UCITS being established which pursue what would typically be considered to be alternative investment strategies. This trend is expected to continue in 2010.

Interest in UCITS alternatives is evident both from asset management firms which have existing regulated funds and are seeking to explore the alternative space within the UCITS framework as well as from alternative asset management firms which have, until now, principally managed what might loosely be described as unregulated funds.

We have prepared this briefing paper to address some of the more pertinent questions being raised by asset managers considering the establishment of UCITS alternative investment funds.

The questions considered in this briefing paper are just some of the high level issues which may come under consideration for an asset manager considering a UCITS alternative investment fund. For a more detailed consideration of the UCITS product, please refer to our publication entitled "A Guide to UCITS in Ireland" or feel free to contact us directly to discuss.

Why should we consider establishing a UCITS alternative investment fund and why now?

We have highlighted below some of the reasons why UCITS alternatives are attracting interest now.

Investor demand for regulated fund products Investor demand for regulated fund products seems to be one of the key factors why UCITS are now receiving significant interest from the alternative investment community.

Specific instances of fund blow ups have focussed investor concerns on the perceived lack of transparency and lack of investor protections offered by many unregulated funds.

UCITS III

Following implementation of UCITS III, UCITS can facilitate many alternative investment strategies – long/short, absolute return, hedge fund/commodities index products, UCITS, funds of alternative funds (often referred to as "UCITS FoHFs"), etc. - with continuing developments being seen in the interpretation of what can be held in / managed within UCITS. The increased level of understanding of the parameters of UCITS III as well as the broad marketing options available to UCITS are driving the recent increase in the number of these type of funds being established.

UCITS brand recognised worldwide UCITS is considered to be the European "gold standard" investment fund product and is recognised worldwide as a robust, well-regulated product attracting investment from within and from a...

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