Ucits-compliant absolute return funds have returned over 2% to investors over the past five years while hedge funds lost money.
The Ucits funds’ average return was 2.72% annually, whereas hedge funds lost an average of 0.46% per year.
German asset manager Lupus Alpha carried out the research, examining 565 funds.
Despite the strong showing for the Ucits-regulated funds, less than 30% of them posted positive results last year, largely due to high levels of European equity exposure. Performance varied widely across the universe, with some funds returning 20.56%, while others lost 23.63%.
Overall, the Ucits absolute return funds posted average losses of 3.5%, compared to the average 5.63% loss delivered by hedge funds.
Lupus also found the absolute return universe is largely comprised of small funds; 68% have assets under €250 million and 11% boast assets in excess of €1 billion.
However, there is also a correlation between the size of a fund and the inflows it attracts, with the top 5% of funds by size receiving two thirds of new assets over the past year.
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