Research by HedgeFund Intelligence shows that over 50% of all Europe's hedge fund companies either plan to launch, or have already launched, Ucits-compliant onshore funds.

The new generation of Ucits- or 'Newcits' - funds being launched by hedge funds, and the challenges they pose for fund selectors, were discussed in depth at Citywire's Berlin Forum last week (see article here). It is set to be a major trend in the funds industry, with the distinction between traditional and alternative asset managers becoming increasingly blurred.

Hedge fund firms such as Brevan Howard, Marshall Wace, Exane, and Man Investments have already launched Ucits funds, and the report from HedgeFund Intelligence suggests plenty more are going to follow in their footsteps.

More than 650 European hedge funds were surveyed for the report, and just over 20% of them have already launched, or are in the process of launching, Ucits III funds. A further 30% of groups say they are considering launching such funds.

However, it seems many groups are content remaining in the alternative, offshore space. Almost 50% of Europe's hedge funds have no plans to launch Ucits III funds at the moments. This comes as little surprise as, due to the restrictions laid out by the Ucits framework, many hedge groups would be unable to replicate their existing strategies within a Ucits wrapper, and would be unable to meet liquidity and transparency requirements.

HedgeFund Intelligence's research manager Damian Alexander said of the research: 'There have been a number of high profile Ucits III launches in recent months and our figures confirm that these are part of an industry-wide trend. Considering the flexibility UCITS III offers in allowing hedge fund firms to expand their investor bases across European borders, we’re forecasting that the trend will continue.'