Europe’s asset managers have now launched over 200 UCITS with hedge fund like strategies, and many more are in the pipeline. As the trend grows, we review the need for tighter regulation both to protect retail investors and the valuable UCITS brand.
Yet the conflict between welcome innovation and protecting the retail investor needs to be carefully managed. While many of the larger hedge fund managers have been running Newcits for several years, less established competitors are now beginning to do so. This has worrying implications because newer managers may not differentiate clearly between institutional and retail investors. Being less well-established, they also have smaller reputational risk and may lack the financial strength to support a fund should it run into difficulty.
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