When it comes to advising on the state of the UCITS hedge funds industry, investment consultants are “behind the curve” when it comes to this sector, according to 38 per cent of investors polled for the latest research from Alix Capital, the Geneva-based provider of the UCITS Alternatives Index family of indices.

The survey, which examines institutional investors’ attitudes to the sector, reveals a significant shift in allocation intentions. For the first time since summer 2011, respondents plan to decrease their allocation to fixed income and increase allocation to equity long/short strategies. Over half of respondents believe that performance needs to be improved for institutional investors to increase their allocation.

“While the majority of institutional investors understand the advantages that UCITS hedge funds can offer them, especially in regard to liquidity, transparency and regulation, there are still many improvements that need to be made to improve the perception of UCITS as a competitive framework. Providers need to enhance communications with the investment consultant community to improve their understanding and awareness of the UCITS alternative space,” said Louis Zanolin, chief executive of Alix Capital.

The Alix Capital survey was conducted in December 2012 among 52 participants, including single fund and fund of funds managers’ investors (over 40 per cent of respondents), banks, insurers, pension funds, high net worth individuals, and service providers.

The survey reveals that UCITS hedge funds’ assets under management are forecast to see continued growth in the next six months, with 69 per cent of investors expecting to increase their allocation for 2013. Long/short equities are likely to be popular, with 48 per cent of respondents intending to increase their allocation within the strategy in the next six months, while emerging markets and event driven are the next most popular strategies, with at least 35 per cent of respondents intending to increase their allocation, the firm said.

Meanwhile, 36 per cent of respondents plan to decrease their exposure to fixed income - and private banks are expected to be the main buyers of alternative UCITS products, followed closely by pension funds. Respondents agreed that UCITS alternative funds appeal to institutional investors as they provide access to absolute return strategies in a regulated, transparent, and liquid manner, the firm said.