29/06/2011 Author: Will Wainewright

York’s Walker warns of Ucits pros and cons 

Veteran hedge fund manager Nicholas Walker backed Ucits structures in Monaco last week but sounded a warning that, in his experience, increased liquidity harmed long-term returns.

The managing partner at York Group, a $300m hedge fund manager with a Ucits offering worth $60m, was speaking in a discussion at Gaim International that saw the appropriateness of so-called ‘Newcits’ funds questioned.

“Restricted liquidity is important for long-term returns,” said Walker, adding marketing was an issue for Ucits funds. “You have to put a bit more time into the marketing without perhaps the same amount of returns ... but it is something we are working on.”

David Miller of Cheviot, a UK-based discretionary investment firm, agreed that Ucits rules could have an impact on hedge fund performance. “What worries me most is that rules will hobble hedge funds that go down this route and exclude them from some of the returns that I think are on offer over the next five years,” he said.

He argued that Ucits did, however, present considerable advantages. “The fact is [Ucits funds are] tax-efficient compared to onshore funds.”