Institutional investors hungry for retail-style products

Liquid alternativesLiquid alternatives in a Ucits format are attracting interest from a wider range of investors, as a cost-effective means of meeting the transparency requirements of Solvency ll.

Research by analytics firm Cerulli Associates shows institutional investors such as insurers and pension funds are turning to retail-style alternative products as a way of addressing regulatory pressure and bridging the yield gap created by low-performing debt holdings.

The report found 86% of asset managers predicted an increase in demand for alternative Ucits funds over the next two years. Ucits products are increasingly alluring conservative institutions in France and Germany to alternatives, as well as insurers EU-wide, following the introduction of Solvency II.

Hedge fund managers also say they expected Ucits to be one of the most likely formats for new fund launches over the next two years.

Alternative beta products are also being sought and implemented by institutional clients as a flexible means of achieving diversification and mirroring hedge fund returns. A number of alternative asset managers and hedge fund houses across Europe are evaluating or have already developed alternative beta strategies, although some are sceptical.

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