Will Alternative Ucits Ever be Loved Enough to Replace Hedge Funds?

21 Pages Posted: 3 Oct 2010 Last revised: 29 Oct 2011

See all articles by Nils Tuchschmid

Nils Tuchschmid

Tages Capital LLP

Erik Wallerstein

University of Applied Sciences Western Switzerland - Geneva School of Business Administration

Louis Zanolin

Alix Capital

Date Written: September 30, 2010

Abstract

This article analyses a new data base on Ucits "hedge funds", or alternative Ucits funds. These are EU regulated investment vehicles allowing for a relatively large degree of latitude for fund managers which makes them attractive for hedge fund-like strategies. The asset under management of alternative Ucits funds has seen large capital inflows, in contrast to the hedge fund industry as a whole, and was in Q1 2010 managing €83 bn ($121 bn). We examine the performance of these alternative Ucits and compare them to the performance of hedge funds. We do not find any conclusive evidence that the less regulated hedge funds outperform alternative Ucits funds on a risk adjusted basis, even though we find some cross-sectional evidence. We also find a significant difference in level of risk between hedge funds and alternative Ucits funds with the latter bearing less risk. This is anticipated due to the limits on risk and leverage under the Ucits regulation.

Keywords: Ucits, hedge funds, portfolio analysis, fund regulation

Suggested Citation

Tuchschmid, Nils and Wallerstein, Erik and Zanolin, Louis, Will Alternative Ucits Ever be Loved Enough to Replace Hedge Funds? (September 30, 2010). Available at SSRN: https://ssrn.com/abstract=1686055 or http://dx.doi.org/10.2139/ssrn.1686055

Nils Tuchschmid

Tages Capital LLP ( email )

SW1Y 5NQ London
United Kingdom

Erik Wallerstein (Contact Author)

University of Applied Sciences Western Switzerland - Geneva School of Business Administration ( email )

CH-1227 Geneva
Switzerland

Louis Zanolin

Alix Capital ( email )

Place de la Fusterie 12
Geneva, 1204
Switzerland

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