Alternative UCITS & Hedge Funds workshop Moderator: Panelists: Christopher Stuart Sinclair, Director, Deloitte Donna Hutchings, Managing Director, Citco Fund Services (Singapore) Régis Malcourant, Partner, PwC Alain Guérard, Managing Director, ManagementPlus (Luxembourg) S.A.
AGENDA 1. Key Figures What it is all about 2. Hedge Funds Structures in Luxembourg 3. Products / Market Trends 4. Operational Considerations 3
1. KEY FIGURES HF in Luxembourg Assets under management in Hedge funds administered in Luxembourg ( millions) 80,000 millions 60,000 40,000 11,999 14,688 14,236 26,202 40,419 35,418 20,000 34,179 34,638 32,622 29,868 30,998 35,454 0 Dec 08 June 09 Dec 09 June 10 Dec 10 June 11 Domiciled & Administered Administered Source: ALFI 4
1. KEY FIGURES FoHF in Luxembourg millions Assets under management in funds of hedge funds administered in Luxembourg ( millions) 100,000 50,000 45,521 27,494 25,033 37,826 29,057 25,371 48,432 51,712 52,020 47,646 46,372 46,671 0 Dec 08 June 09 Dec 09 June 10 Dec 10 June 11 Domiciled & Administered Administered Source: ALFI 5
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Sep-11 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Sep-11 1. KEY FIGURES SIF 1,400 Number of SIF 1,340 250 Net assets of SIF in bn. 1,200 1,000 800 200 150 600 400 200 100 50 0 0 Number of funds under: - old 1991 law as at February 2007: 227 - law on SIFs as at September 2011 : 1,340 Net assets of UCI under: - old 1991 law as at February 2007: 81 bn - law on SIFs as at September 2011: 230 bn Source: Annual report CSSF 2010 and monthly CSSF statistics 6
1. KEY FIGURES Alternative UCITS in Europe AuM (EUR million) Evolution of the Alternative UCITS market 90,000 957 1,000 80,000 827 83,225 900 70,000 75,269 800 60,000 67,091 646 68,741 700 50,000 40,000 30,000 44,709 267 357 450 560 37,106 51,807 600 500 400 300 20,000 200 10,000 100 0 2005 2006 2007 2008 2009 2010 Jun-11 (est) 0 Alternative UCITS Assets # Alternative UCITS Source : Lipper UCITS Absolute return according to Lipper category 7
2. HEDGE FUNDS STRUCTURES IN LUXEMBOURG UCITS Law of 17 December 2010 UCI Part II Law of 17 December 2010 SIF Law of 13 February 2007 Self-managed ManCo SICAV / SICAF FCP ManCo Umbrella Umbrella 8
2. HEDGE FUNDS STRUCTURES IN LUXEMBOURG Regulation public distribution (retail + institutional investors) EU passport eligible asset classes only high level of regulation UCITS Law of 17 December 2010 public distribution (retail + institutional investors) no EU passport all asset classes medium level regulation UCI Part II qualifying investors only (institutional, professional, well-informed) all asset classes low / medium level regulation SIF Law of 17 December 2010 Law of 13 February 2007 Structuring - flexibility 9
2. HEDGE FUNDS STRUCTURES IN LUXEMBOURG Mandatory Luxembourg service providers: Directors Custodian Central Administration Agent Auditor UCITS UCI Part II SIF Optional service providers: Investment Manager Investment Advisor Distributor Prime Broker Promotor requirement (only UCITS and UCIs) Risk Management (only UCITS and UCIs) Substance requirements (only UCITS) 10
3. PRODUCTS / MARKET TRENDS Alternative UCITS By AuM as at February 2011 Macro, 7% Others, 6% Fixed Income, 14% Long/short Equities, 37% Arbitrage, 4% Long-Only Absolute Return, 21% CTA/Managed futures, 6% Multi-Strategy, 5% Source : EurekaHedge April 2011 11
3. PRODUCTS / MARKET TRENDS Alternative UCITS Alternative UCITS by Domicile Luxembourg holds half of the market Austria, 2.00% UK, 3.300% In number of funds Others, 4.500% France, 10.100% Luxembourg, 54.700% Ireland, 25.400% Source : EurekaHedge April 2011 12
3. PRODUCTS / MARKET TRENDS Alternative UCITS Alternative Ucits Index vs Hedge Funds Index and MSCI World A downside protection by capturing most of the upside 13
Case 3 Case 2 Case 1 3. PRODUCTS / MARKET TRENDS SIF Managed Accounts Platform / Multimanager platform Single Institutional Investment vehicles Incubator for future Alternative UCITS 14
4. OPERATIONAL CONSIDERATIONS Growth in alternative funds Similar challenges as offshore funds around pricing/valuation as strategies become more complex. Alternative strategies adds to the complexity around risk reporting and calculation Custodian Responsibility/oversight for sub custodian network this could limit access to markets and instruments Role of the Board Effectively the same, however, onshore Boards have generally become more involved Weavering case will push Boards in the same direction Other considerations Platforms Delegation 15
Closing Drink