Ucits or lose it: life on the hedge

Right now Ucits are hotter than Brad Pitt and Angelina Jolie in a sauna as hedgies fire off new funds into the market left, right and centre. About 75 to 100 Ucits funds are estimated to have been launched to date, a figure that rises to around 300 when Ucits hedge funds are taken into account. The sudden craze is partly due to high profile hedge fund names such as Man Group, Brevan Howard and GLG Partners launching replicas of their existing hedge funds in the Ucits III format. Some have claimed that hedgies are tapping into the Ucits space in a bid to trump the draft EU directive on Alternative Investment Managers due to come into force next year, whilst others say that hedge funds are keen to expand their investor base. But some industry pundits have urged caution that the conversion of complex hedge funds into Ucits funds could expose smaller investors to hidden risks.

Hedge funds will need to change their business model in order to survive..."transform or die" is a cry often heard in the press. But does the entry of hedge funds into the regulated, onshore Ucits space not threaten the traditional offshore unregulated hedge fund model? Could this be a sign that the traditional hedge fund model is becoming obsolete?

NB