While chief executive Daniel Godfrey used his foreword in today’s publication to talk up the strength of UK asset management, with some £835bn invested into authorised funds by the end of 2014, he also highlighted its evolution.
“The increasing solutions and outcome focus within the wider industry suggests that active management may need to be defined more broadly than simply stock and securities selection,” he said.
This in turn fits in with the report’s statement that the “retail/institutional split is becoming increasingly blurred as a result of a number of developments” including the growth of platform intermediation and the growing DC market.
Certainly, we have seen plenty of evidence of the ‘outcome focused’ products that Godfrey alludes to – just look the growth of the multi-asset space, its fortunes aided by the new pensions freedoms.
The blurring of the retail/institutional worlds within alternatives has been far more subtle, but equally as astounding.
Just today, BlackRock announced the launch of its UCITS Strategic Funds’ Global Event Driven Fund, one of the few ways for wholesale investors to access such a strategy. Ten or even five years ago, this would have been an unlikely route for such a large-scale retail player.
“I can’t think of another dedicated event-driven UCITS fund and am surprised that one can get enough diversification to make that work without compromising on the raison d’etre,” comments Nick Sketch, senior investment director at Investec Wealth & Investment.
For Alan Higgins, chief investment officer at Coutts, event driven strategies can work within the UCITS framework, in part because they are equity based and less likely to suffer illiquidity constraints.
He points to other UCITS products in this category from the likes of York (through Merrill Lynch) and PSAM (through Morgan Stanley), though these are names more commonly associated with the hedge fund space. For the time being Coutts invests in event driven via Bill Ackman’s Pershing Square closed-ended fund.
“Ongoing, we continue to see more complex hedge funds strategies put into UCITS format,” he adds.
“Equity oriented strategies tends to work quite well, as well as macro strategies which tend to be more cash rich from the heavy use of futures, though it’s the credit-oriented and distressed debt funds that are harder to implement in UCITS because of the lack of liquidity.”
