Gwyn Roberts

13/07/2011 Author: Gwyn Roberts

Editor's view: 14 July 2011

Now that July’s crucial Ucits IV deadline is behind us, it’s worth reflecting on just how influential the wrapper has become. Whether down to investor demand – or, as some cynics suggest, just for marketing impetus – the vast majority of managers now feel naked without the ability to offer a ‘Newcits’ fund.

The phenomenon shows little sign of a slowdown. Launches have accelerated in 2011. While Ucits distribution platforms have hit significant milestones this year, with Schroder Gaia breaching the $1bn-mark and Merrill Lynch’s continuing to shoot the lights out with $2.3bn in assets and a busy pipeline of new funds. Best of all, the continued growth seems to have been achieved without cannibalising revenues at long-standing offshore vehicles.

It’s all going rather well. But the current level of success doesn’t mean that the Newcits-brand should be regarded as Teflon coated. Regulators in Luxembourg and Dublin have become a little more hawkish about licensing hedge fund strategies of late, while – just as in the offshore world – the big, well-distributed funds are benefiting from the surge in interest, while smaller managers are lucky to creep up to $100m.

So, wrapping your fund in the EU flag isn’t a licence to print money. However, with investors comfortable with the brand and AIFM uncertainty still abroad, Newcits will remain a fixture of the hedge fund sector.

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