Currently the use of UCITS within institutional portfolios is relatively niche, with just 8% of all investors having a current investment in a UCITS hedge fund vehicle. All of these investors are based in Europe. However, over the course of 2010, 35% of all institutional investors – including those based outside of Europe – are poised to invest in a UCITS fund. Investors are turning to UCITS funds for their liquidity and transparency as well as for the strong regulatory framework that such a structure provides. However, the leverage and strategy limitations of the UCITS framework is a deterrent for some investors, which are opting to continue investing in “traditional” hedge fund structures for the foreseeable future.
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