Abstract
This article analyses a new data base on Ucits funds, or alternative Ucits funds. These are EU regulated investment vehicles allowing for a relatively large degree of latitude for fund managers which makes them attractive for hedge fund-like strategies. The asset under management of alternative Ucits funds has seen large capital inflows, in contrast to the hedge fund industry as a whole, and was in Q1 2010 managing €83 bn ($121 bn). We examine the performance of these alternative Ucits and compare them to the performance of hedge funds. We do not find any conclusive evidence that the less regulated hedge funds outperform alternative Ucits funds on a risk adjusted basis, even though we find some cross-sectional evidence. We also find a significant difference in level of risk between hedge funds and alternative Ucits funds with the latter bearing less risk. This is anticipated due to the limits on risk and leverage under the Ucits regulation.
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