Specialised hedge fund structures such as managed account platforms and UCITS hedge funds are growing in popularity as investors aim for more liquidity and transparency in their portfolios following the credit crisis. Investor demands are driving the growth of these structures as investors seek to allocate to more liquid alternatives to the traditional commingled fund model.
UCITS funds are becoming popular as they offer daily, weekly or two weekly liquidity meaning investors have a greater deal of control over their portfolio. Some investors such as fund of hedge funds manger Bellatrix Asset Management make all of their hedge fund investments through UCITS funds as a result of this greater liquidity. London based asset manger Cheviot Asset Management is planning to increase its exposure to UCITS funds and is looking to redeem from some of its funds of hedge funds in order to invest in single manager UCITS funds.
Managed account structures are also becoming more popular due to the increased liquidity and transparency that these platforms provide. Fund of hedge funds manager Krusen Capital Management recently announced that it plans to transfer all of its commingled investments to managed accounts in order to gain more control over its investments. As of result of this fund managers are having to respond to these changing views and fund of hedge funds manager Aurora Investment Management plans to launch some new separately managed account platforms by the end of 2011.
There is plenty of evidence to suggest that the popularity of managed accounts and UCITS funds is growing amongst institutional investors. For now these structures remain relatively niche as the traditional commingled fund model remains the most popular method of investment. However it is expected that more and more investors will continue to target these structures as hedge fund liquidity and transparency become increasingly important.