Alt UCITS: liquidity risk issues

Rumours have been flying around about more liquidity problems at various UCITS funds. Woodford and H2O are the only two managers to have gated funds to date, although there is a third UK based manager that has problems in share classes at one or more of its funds.

None of these managers has alternative funds, which is long thought to be where liquidity problems would first arise at UCITS funds. But will the problems experienced by Woodford and H2O spread into UCITS funds that are marketed and categorised as being alternative? Is the risk oversight of these funds up to scratch and prepared for any possible contagion?

There are approximately €10 trillion of assets invested in UCITS funds, with alternative UCITS funds having around €500 billion in assets. The possibility of a liquidity crisis in the alternative UCITS sector has been raised in the media many times.

To read more on this story see the July issue of The NED.