Citi has rolled out a service for operating European Union-domiciled hedge funds, focusing on the increased demands from investors for such funds to be registered in Europe, the US bank said.

The service includes prime finance, custody, middle office support, fund administration, corporate secretarial services, distribution support, fiduciary services and compliance monitoring. It builds on the bank’s existing middle, front and back-office capabilities.

“Investors are now focused on governance, risk management, independent valuation and transparency of reporting," says Citi's Andrew Gelb, head of securities and fund services in Europe, Middle East & Africa, "and hedge fund managers are increasingly offering UCITS and other EU-domiciled fund structures to meet these needs as the industry continues to converge across the alternative and traditional fund sectors."

Hedge fund firms are increasingly using UCITS vehicles to sell alternative investment products to the public as these wrappers typically provide relatively high levels of transparency and liquidity when compared with traditional hedge funds. Demand for liquidity has become particularly marked after the sector was hit by record losses in 2008, although hedge funds rebounded last year.