Modernising the UCITS directive must be considered an "urgent" priority if Europe is to maintain its "successful and competitive edge" in the investment market.
That is according to The European Fund and Asset Management Association (EFAMA), which today announces in its annual report investors poured more than €540bn into European funds last year.
Steffen Matthias, secretary general of EFAMA, says: “For the fourth consecutive year there has been significant growth in the European investment fund industry.
"The modernisation of the UCITS directive and the realisation of a level playing field in the European market for savings and pension products now becomes increasingly urgent to maintain that successful and competitive edge.”
The EFAMA factbook suggests investment funds in Europe grew by 15% a year from 2003 to 2006, to €7,552bn.
It adds the success of cross-border funds in Europe is growing, pointing out net sales reached €326bn in 2006.
In addition, the report outlines funds domiciled in Luxembourg and Ireland accounted for 60% of total net inflows into UCITS and non-UCITS in 2006, against 55% in 2005.
Equity funds recovered strongly from the stock market downturn of 2001 to 2002, reaching €2,189bn in 2006, or 41% of total UCITS assets.
EFAMA attributes the trend to the evolution of Europe’s distribution environment towards funds of funds, wraps and direct distribution of third-party funds, and the “recognition of UCITS as the only true global distributed fund product.”
Balanced funds, special funds dedicated to institutional investors and funds of hedge funds, reached total net sales of €540bn in 2006, against €507bn in 2005 and €278bn in 2004.
European households held an average 11.5% of their financial wealth in investment funds in 2006, against 11.3% in 2002.
Mathias Bauer, president of EFAMA, says: “This evolution underlines the need to close the gap separating UCITS from less transparent savings products, so as to allow households to make well-informed choices between alternative savings products.”
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