While one of the big trends in the mutual fund industry has been its embracement of sophisticated alternative investments, mutual funds and hedge funds are both about to become even more complex in the next year, the Financial Times reports.
In Europe, Asia, Africa and Latin America, funds are taking advantage of the European Union’s 2006 Ucits III legislation, which permitted regulated funds to increase their exposure to derivatives and other asset classes.
“This is going to completely change the investment industry as we know it,” said Michael Ward, chairman of the Ucits III steering committee at
“We are being approached by a number of hedge fund managers asking us if it is technically possible to do convertible arbitrage in a Ucits environment,” Wards said. “I’m certain that there is going to be a broader range of strategies to choose from.”
Guy Monson, chief investment officer at
In the U.S., Merrill Lynch estimates that $75 billion is currently invested in mutual funds that use alternative strategies, with two-thirds of that money in 130/30 funds and the rest in market-neutral funds. Steve Deutsch, an analyst with