Hedge funds in Europe have begun embracing the UCITS III structure to sell their portfolios to a wider base of retail investors and rebuild trust, but shareholder interest groups warn this may be a vast mistake. Transparency of complex structures still does not make an investor well-informed or an investment suitable, they argue.
“UCITS III is a reflection of the wider investment world, and it makes a lot of sense,” Matthew Lamb, head of mutual funds, UK and Middle East, at GAM, told Fund Strategy. “However, there is a danger in squeezing every known hedge fund strategy, particularly those that were offshore and unregulated, into a UCITS III structure. It is important to carefully match the liquidity requirements of the investor with the liquidity of the fund.”