Speaking at FINforums Annual Hedge Fund Summit in New York, several senior executives - Ludiger Hentschel, Principal and Head of Quantitative Research and Asset Allocation at Investcorp and Meredith Waterman, Co-head of Managed Accounts Strategy at Man Investments - favored managed accounts as the best hedge fund investment structure. Investors get transparency, liquidity and control. They receive daily position information and liquidity is not controlled by the fund manager but by the investor. As for the returns under a managed accounts structure, they outperform others according to Hentschel.
A different hedge fund structure promoted by Adam Patti, CEO of IndexIQ, is investible indexes. He stated that investors can replicate hedge fund returns by using derivatives and ETFs. Investors receive liquidity, transparency, low fees and tax efficiency.
These two structures are better than the popular UCITS (Undertakings for Collective Investment in Transferable Securities) funds. This European structure allows funds to market themselves to a wider audience than a standard structure. UCITS funds generally have easy liquidity (14 days notice), leverage is limited to two times assets and does not allow the manager to have most of the assets in a single position. Waterman stated that UCITS funds underperform regular funds.
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