Newcits greatest risk is 'not living up to hype'
From Products Mar 15 2010 BY: Simon Danaher
, Online News Editor
, International Adviser
One of the biggest threats to the growing Ucits hedge fund sector is it ‘not living up’ to its hype, according to a survey of 180 European investors, fund managers and fund promoters.
In the survey, conducted by Alternative Decisions, three quarters of respondents said ‘newcits’ products risked not living up to expectations set by industry hype or could disappoint through their performance.
In order to avoid disappointment and to protect investors from rogue traders, 44% of respondents said greater investor education about the products is needed.
A spokesperson for Alternative Decisions said they believe the current euphoria for Ucits needs to be married to education and technical know-how and added while the Ucits structure is a great brand for certain hedge fund strategies, successful asset attraction demands new marketing and distribution techniques.
In particular the firm said those groups selling the products need to understand the importance of highlighting both the negative as well as the positive sides of using a hedge fund strategy and to understand the responsibilities they have in educating consumers.
In response to its findings, Alternative Decisions has published the ‘Better UCITS Hedge Funds’ guide which includes further detail on the findings of the study and information on how to deal with tougher regulation, marketing of products and further risks.