2023’s outflows in alternative Ucits stabilised by Q4, study shows

While 2023 witnessed significant outflows totalling $38 billion across most alternative Ucits strategies, Q4 stabilised with a slight decline of around -$2 billion, according to research.

Multi-strategy and macro strategies faced substantial redemptions, while managed futures and volatility arbitrage demonstrated resilience, attracting sustained investor interest, according to a study by alternative fund research firm Kepler Absolute Hedge. Additionally, catastrophe bond funds experienced notable inflows.

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The report highlights a surge in new launches, with 11 funds entering the market in the latter half of 2023, signalling continued momentum into 2024, with esteemed managers planning Ucits vehicle launches.
In terms of performance, alternative Ucits funds delivered robust results in 2023, with Absolute Hedge’s Global Index registering a 4.3% increase, marking the third-best year of returns since the index’s inception in 2010.

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Credit-oriented strategies, particularly beta-driven ones, drove this performance, while uncorrelated strategies like managed futures posted subdued returns amid market volatility, shared the firm. Noteworthy performers included TMT/growth equity, short volatility and credit funds, while exposures to China and ESG were cited as drivers of underperformance.

Matthew Barrett, partner and head of manager research at Kepler Partners, commented: “2023 presented a mixed picture for the alternative Ucits sector; the flows backdrop was challenging, with outflows across all strategies. However, some individual funds garnered significant inflows and there were successful fund launches.
We have tracked the alternative Ucits sector since its infancy, and what we see today marks the ongoing maturation of the asset class as it continues to offer investors attractive diversification opportunities amid market turbulence.”

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