ML Capital UCITS Barometer Q3 2012


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ML Capital UCITS Barometer Q3 2012

  1. 1. Alternative UCITS Barometer Quarter 3, 2012
  2. 2. IntroductionML Capital Asset Management, the investment manager and promoter of the MontLakeUCITS platform, is delighted to present the 7th edition of the quarterly ML Alternative UCITSBarometer (ML Barometer).The Barometer is designed to help identify and anticipate key trends in the demand for themajor strategies within the Alternative UCITS sector.The range of allocators surveyed is purposely diverse, to reflect the widening of theAlternative UCITS investor base as hedge funds move from the offshore periphery to theonshore mainstream. Respondents range from insurance and pension funds to privatebanking organisations, with a significant constituent of financial advisers that deal with theprimary source of Alternative UCITS inflows, the mid-net-worth investor.ML Capital surveyed a diverse range of 51 active investors in Alternative Investments, whocollectively manage over €100 billion and today invest upwards of €62 billion of those assetsinto Alternative UCITS. Questions are aimed at discovering their forthcoming strategyallocations and the same respondents are questioned each quarter, in order to track assetflows between UCITS strategies.Commenting on the latest survey, John Lowry, Chairman of ML Capital; “With the ongoingdifficult market conditions, Alternative UCITS investors are seeking the relative safe havens ofstrategies that offer greater perceived protection, including global macro, market neutral andespecially Fixed Income strategies. All of these strategies are relatively under supplied atpresent in UCITS format and this represents a major opportunity for teams experienced inthese sectors to raise significant AUM”We trust the Barometer will provide a useful insight into this new and rapidly growing area ofalternatives. Our thanks go out to all the survey respondents.Cyril Delamare, CEO2
  3. 3. Investors taking a defensive stance with a big redeploymenttowards Fixed Income, Global Macro and Market NeutralStrategies.• This quarter investors appear very reluctant to make strong bets and are planning to reduce their exposures to directional strategies with most of the key Equity long- short strategies seeing a significant drop off in demand for this quarter.• At the same time, the continued crisis in the markets is driving flight to perceived safety, resulting in increased demand for less market oriented strategies such as Global Macro, Fixed Income and Equity Market Neutral.• The Relative Value area is one of the biggest winners this quarter. 60% of respondents are keen to up their exposure into Fixed Income funds, while the last 3 months has seen a doubling in demand for market neutral funds, with over 40% looking to increase their holdings.• There has been a sharp drop in confidence in previously top rated US and Global Equity sectors, with in excess 25% drop in demand this quarter.• There are brighter prospects for two of the main long short strategies, with demand for Asian, and interestingly, European strategies remaining relatively strong.3
  4. 4. Profile of RespondentsPrimary Place of Business 4
  5. 5. Long Short Equities • MORE • SAME • LESSWith general optimism on the economic outlook relatively weak at present, it is not unexpectedto note demand for Equity hedge funds receding in results for this quarter. Global Equitylong/short strategies, which had become one of the most popular over the past year, have nowdeclined, with less than 30% now planning to increase their exposures. US long/short funds,both the largest and deepest of all hedge fund sectors, has also seen a weakening in demanddown to just under 30%.Long Short Equities Evolution • MORE • LESS 5
  6. 6. Long Short Equities • MORE • SAME • LESSEurope is considered an attractive region in which to invest with 30% planning to increaseallocations. The level of support for Japanese funds which had shown an increase in demand inthe previous quarter’s results, has now receded, with only 9% planning an increase and over 40%planning to fire their Japanese Managers.Long Short Equities Evolution • MORE • LESS 6
  7. 7. Emerging Markets • MORE • SAME • LESSPositive results were achieved by Asian hedge funds which held up strongly, with 30% ofrespondents planning to increase their allocations to Asian alternative UCITS funds. Support alsoremains quite solid for Latin American funds, however demand for Global Emerging funds hasfallen, even though it still remains one of the more popular equity strategies with over one third ofinvestors looking to raise exposures. This keeps it just ahead of demand for Asian focussedregional funds.Emerging Markets Evolution • MORE • LESS 7
  8. 8. Relative Value • MORE • SAME • LESSThe Relative Value area is one of the biggest winners this quarter. It also contains the twostrategies with the biggest percentage rises. 60% of respondents are keen to up their exposureinto Fixed Income funds, while the last 3 months has seen a doubling in demand for marketneutral funds, with over 40% looking to increase their holdings.Relative Value Evolution • MORE • LESS 8
  9. 9. Event Driven • MORE • SAME • LESSIn the Event Driven Space, demand remains relatively muted across the board. Multi-Strategy stillremains the strongest within the area, with just under 30% seeking to increase exposure.However, there has been a consistent drop every quarter. At the commencement of theBarometer at the start of 2011, the demand levels were in fact over double the current levels atalmost 60%. There has been a similar drop in interest for Merger Arbitrage strategies, while thedemand levels for distressed have remained more consistent. This quarter however, a lowly 15%plan to increase distressed holdings.Event Driven Evolution • MORE • LESS 9
  10. 10. Macro & CTA • MORE • SAME • LESSGlobal Macro is the most popular strategy this quarter, with 70% of respondents surveyedindicating that they will increase their allocations. CTA and Systematic strategies also are wellsupplied. A major concern for investors however is the lack of supply of well-established managersin these areas. At present these two most popular strategies represent less than 10% of the totalof the alternative UCITS universe (source something that will need to be addressed.Macro & CTA Evolution • MORE • LESS 10
  11. 11. TablesLong/Short Equity Emerging Markets More Same Less More Same LessGlobal L/S Equity 28% 42% 30% Global 36% 55% 9%UK L/S Equity 13% 45% 42% Emerging Latin America 17% 70% 13%US L/S Equity 28% 42% 30% Pan Asia 30% 57% 13%European L/S Equity 21% 42% 38%Japan L/S Equity 9% 49% 42%Relative Value Event Driven More Same Less More Same LessFixed Income 60% 34% 6% Multi- 28% 53% 19%Convertible 25% 60% 15% StrategyArbitrage Distressed 15% 51% 34%Market Neutral 42% 51% 8% Merger 21% 55% 25% ArbitrageMacro & CTA More Same LessGlobal Macro- 70% 23% 8%DiscretionaryGlobal Macro- 47% 47% 6%SystematicManaged Futures / 47% 42% 11%CTA 11
  12. 12. About ML CapitalML Capital is an independent and privately owned financial services group at the forefront ofbringing high quality alternative investments to the mainstream. Utilising our collective industryexperience and expansive network of contacts, we are dedicated to locating the very bestboutique fund managers and working with them to introduce their skills to the rapidly growingmarket for quality onshore regulated investment products.ML Capital has launched the MontLake UCITS Platform, which has become the fastest growingUCITS platform in the market which delivers a range of specialist boutique alternative managers toinstitutional and retail investors.ML Capital also creates and sponsors a range of non-UCITS regulated European investment fundssuch as the QIF and PIF, for investment managers and advisors whose strategy do not fit the UCITSframework.Our senior partners have many years of hedge fund experience in key areas incorporatingmanager due diligence, portfolio management, operations, risk management anddistribution. Through our diverse backgrounds, extensive experience and industry knowledge, ourprofessionals have a proven track record in delivering investment products and solutions whichperform to the highest standards.ML Capital is headquartered within the European Union in Malta and has offices in London andGeneva.About The MontLake UCITS PlatformThe MontLake UCITS Platform, domiciled in Ireland and regulated by the Central Bank of Irelandprovides investment managers with a turnkey solution for launching a UCITS fund under itsumbrella structure. Typical time to market is 10 weeks, or less, with the platform offeringimmediate access to a wide range of investors through ML Capital’s distribution network.Funds placed on the platform by ML Capital will benefit from top-tier service providers includingCiti for custody, administration and trustee services, KPMG for audit, and Bridge Consulting foroversight and directorships. ML Capital has also ensured that managers utilising the MontLakeUCITS Platform will have unfettered access to a network of the leading prime brokerage firms.For more information on ML Capital please visit our website or our platformwebsite 12
  13. 13. Malta Switzerland UKSuite 5 Rue de la Cloche 8 Dorland HouseTigne Palace 1201 20 Regent StreetBisazza Street Geneva LondonSliema SW1Y 4PH+356 2133 4801 +41 (0)22 318 56 70 +44 (0)20 7766 8310info@mlcapital.comwww.mlcapital.com13
  14. 14. DISCLAIMERFOR INVESTMENT PROFESSIONALS ONLYThis financial promotion is issued by ML Capital Limited. This document is notintended as an offer to acquire or dispose of any security. Information given in ithas been obtained from, or based upon, sources believed by us to be reliable andaccurate although ML does not accept liability for the accuracy of the contents. Thisinformation is not intended to constitute a basis for any specific investmentdecision.For Addressee only. The distribution of this report does not constitute an offer orsolicitation. Past performance is not a guide to future performance. The value ofinvestments can fall as well as rise. You should ensure you understand the riskprofile of the products or services you plan to purchase. The services provided byML Capital Limited are available only to investors who come within the category ofthe Eligible Counterparty or Professional Client as defined in the Financial ServicesAuthority’s Handbook they are not available to individual investors, who should notrely on this communication. Information given in this document has been obtainedfrom, or based upon, sources believed by us to be reliable and accurate althoughML Capital does not accept liability for the accuracy of the contents. ML Capitaldoes not offer investment advice or make recommendations regarding investments. 14