09/02/2012
Hedge fund managers will need to be more careful of regulations
Hedge fund managers, a growing number of whom are hoping to launch UCITS hedge funds (known as “Newcits”), will need to remain highly attentive to constantly-changing regulations, Cerulli Associates claims in a survey dedicated to complex products published on 8 February.Managers will need to be prepared to abandon outright, naked short-selling, which is all but unanimously considered to be a counterproductive technique. Criticisms also focus on the use of derivatives, particularly synthetic ETFs, in UCITS hedge funds. Cerulli observes that the most recent statistics on ETFs for 2011 show an aversion to synthetic ETFs, not only due to performance issued but primarily due to regulatory concerns.Cerulli finds that rather than standing out with complex products with a large alpha component, hedge fund managers would do better to concentrate on simplicity and easy-to-understand strategies, in the lines of those which regulators and distributors would like to see.Growth will come largely from hedge fund providers, rather than from traditional actors, who are currently responsible for most products on offer. Richard Day, COO of ML Capital, claims that the segment needs a more diversified product range as well as a wider variety of experienced managers. From his point of view, demand is mostly for managed futures and systemic and discretionary macro strategies.
