2. Introduction
ML Capital Asset Management, the investment manager and promoter of the MontLake
UCITS platform, is delighted to present the 7th edition of the quarterly ML Alternative UCITS
Barometer (ML Barometer).
The Barometer is designed to help identify and anticipate key trends in the demand for the
major strategies within the Alternative UCITS sector.
The range of allocators surveyed is purposely diverse, to reflect the widening of the
Alternative UCITS investor base as hedge funds move from the offshore periphery to the
onshore mainstream. Respondents range from insurance and pension funds to private
banking organisations, with a significant constituent of financial advisers that deal with the
primary source of Alternative UCITS inflows, the mid-net-worth investor.
ML Capital surveyed a diverse range of 51 active investors in Alternative Investments, who
collectively manage over €100 billion and today invest upwards of €62 billion of those assets
into Alternative UCITS. Questions are aimed at discovering their forthcoming strategy
allocations and the same respondents are questioned each quarter, in order to track asset
flows between UCITS strategies.
Commenting on the latest survey, John Lowry, Chairman of ML Capital; “With the ongoing
difficult market conditions, Alternative UCITS investors are seeking the relative safe havens of
strategies that offer greater perceived protection, including global macro, market neutral and
especially Fixed Income strategies. All of these strategies are relatively under supplied at
present in UCITS format and this represents a major opportunity for teams experienced in
these sectors to raise significant AUM”
We trust the Barometer will provide a useful insight into this new and rapidly growing area of
alternatives. Our thanks go out to all the survey respondents.
Cyril Delamare, CEO
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3. Investors taking a defensive stance with a big redeployment
towards Fixed Income, Global Macro and Market Neutral
Strategies.
• 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.
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5. Long Short Equities
• MORE • SAME • LESS
With general optimism on the economic outlook relatively weak at present, it is not unexpected
to note demand for Equity hedge funds receding in results for this quarter. Global Equity
long/short strategies, which had become one of the most popular over the past year, have now
declined, 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 demand
down to just under 30%.
Long Short Equities Evolution
• MORE • LESS
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6. Long Short Equities
• MORE • SAME • LESS
Europe is considered an attractive region in which to invest with 30% planning to increase
allocations. The level of support for Japanese funds which had shown an increase in demand in
the 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
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7. Emerging Markets
• MORE • SAME • LESS
Positive results were achieved by Asian hedge funds which held up strongly, with 30% of
respondents planning to increase their allocations to Asian alternative UCITS funds. Support also
remains quite solid for Latin American funds, however demand for Global Emerging funds has
fallen, even though it still remains one of the more popular equity strategies with over one third of
investors looking to raise exposures. This keeps it just ahead of demand for Asian focussed
regional funds.
Emerging Markets Evolution
• MORE • LESS
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8. Relative Value
• MORE • SAME • LESS
The Relative Value area is one of the biggest winners this quarter. It also contains the two
strategies with the biggest percentage rises. 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.
Relative Value Evolution
• MORE • LESS
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9. Event Driven
• MORE • SAME • LESS
In the Event Driven Space, demand remains relatively muted across the board. Multi-Strategy still
remains 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 the
Barometer at the start of 2011, the demand levels were in fact over double the current levels at
almost 60%. There has been a similar drop in interest for Merger Arbitrage strategies, while the
demand levels for distressed have remained more consistent. This quarter however, a lowly 15%
plan to increase distressed holdings.
Event Driven Evolution
• MORE • LESS
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10. Macro & CTA
• MORE • SAME • LESS
Global Macro is the most popular strategy this quarter, with 70% of respondents surveyed
indicating that they will increase their allocations. CTA and Systematic strategies also are well
supplied. A major concern for investors however is the lack of supply of well-established managers
in these areas. At present these two most popular strategies represent less than 10% of the total
of the alternative UCITS universe (source ucitsindex.eu) something that will need to be addressed.
Macro & CTA Evolution
• MORE • LESS
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11. Tables
Long/Short Equity Emerging Markets
More Same Less More Same Less
Global 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 Less
Fixed Income 60% 34% 6% Multi- 28% 53% 19%
Convertible 25% 60% 15% Strategy
Arbitrage Distressed 15% 51% 34%
Market Neutral 42% 51% 8% Merger 21% 55% 25%
Arbitrage
Macro & CTA
More Same Less
Global Macro- 70% 23% 8%
Discretionary
Global Macro- 47% 47% 6%
Systematic
Managed Futures / 47% 42% 11%
CTA
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12. About ML Capital
ML Capital is an independent and privately owned financial services group at the forefront of
bringing high quality alternative investments to the mainstream. Utilising our collective industry
experience and expansive network of contacts, we are dedicated to locating the very best
boutique fund managers and working with them to introduce their skills to the rapidly growing
market for quality onshore regulated investment products.
ML Capital has launched the MontLake UCITS Platform, which has become the fastest growing
UCITS platform in the market which delivers a range of specialist boutique alternative managers to
institutional and retail investors.
ML Capital also creates and sponsors a range of non-UCITS regulated European investment funds
such as the QIF and PIF, for investment managers and advisors whose strategy do not fit the UCITS
framework.
Our senior partners have many years of hedge fund experience in key areas incorporating
manager due diligence, portfolio management, operations, risk management and
distribution. Through our diverse backgrounds, extensive experience and industry knowledge, our
professionals have a proven track record in delivering investment products and solutions which
perform to the highest standards.
ML Capital is headquartered within the European Union in Malta and has offices in London and
Geneva.
About The MontLake UCITS Platform
The MontLake UCITS Platform, domiciled in Ireland and regulated by the Central Bank of Ireland
provides investment managers with a turnkey solution for launching a UCITS fund under its
umbrella structure. Typical time to market is 10 weeks, or less, with the platform offering
immediate 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 including
Citi for custody, administration and trustee services, KPMG for audit, and Bridge Consulting for
oversight and directorships. ML Capital has also ensured that managers utilising the MontLake
UCITS Platform will have unfettered access to a network of the leading prime brokerage firms.
For more information on ML Capital please visit our website www.mlcapital.com or our platform
website www.montlakeucits.com.
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13. Malta Switzerland UK
Suite 5 Rue de la Cloche 8 Dorland House
Tigne Palace 1201 20 Regent Street
Bisazza Street Geneva London
Sliema SW1Y 4PH
+356 2133 4801 +41 (0)22 318 56 70 +44 (0)20 7766 8310
info@mlcapital.com
www.mlcapital.com
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14. DISCLAIMER
FOR INVESTMENT PROFESSIONALS ONLY
This financial promotion is issued by ML Capital Limited. This document is not
intended as an offer to acquire or dispose of any security. Information given in it
has been obtained from, or based upon, sources believed by us to be reliable and
accurate although ML does not accept liability for the accuracy of the contents. This
information is not intended to constitute a basis for any specific investment
decision.
For Addressee only. The distribution of this report does not constitute an offer or
solicitation. Past performance is not a guide to future performance. The value of
investments can fall as well as rise. You should ensure you understand the risk
profile of the products or services you plan to purchase. The services provided by
ML Capital Limited are available only to investors who come within the category of
the Eligible Counterparty or Professional Client as defined in the Financial Services
Authority’s Handbook they are not available to individual investors, who should not
rely on this communication. Information given in this document has been obtained
from, or based upon, sources believed by us to be reliable and accurate although
ML Capital does not accept liability for the accuracy of the contents. ML Capital
does not offer investment advice or make recommendations regarding investments.
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