Open-Ended Investment Company (OEIC) legislation in the UK has raced ahead of its Ucits 2 counterpar...
Open-Ended Investment Company (OEIC) legislation in the UK has raced ahead of its Ucits 2 counterpart, so that by the end of the year, fund of funds OEICs will be possible but will not be Ucits compliant, frustrating the efforts of fund managers to sell into Europe from the UK, writes Dylan Emery.
On 30 November, OEICs will be able to be both funds of funds and futures and options funds but the endless negotiation that has peppered the European process means that 2002 is now the earliest time Ucits is expected to catch up and allow the passporting of fund of funds.
Sheila Nicholls, speaking for the UK trade body AUTIF, said: 'A lot of fund managers have been waiting for this so they can turn their entire range into OIECs ' the demand for funds of funds in countries like Germany and Spain is high.
'Because we have primary legislation here, we have been able to sort it out ourselves. It is because the new rules come in on that day that OIECs will have their new powers, irrespective of what happens in Europe.'
The lack of synchronisation between the UK and the EU is a source of irritation to companies like Threadneedle, who are using OEICs to sell funds into Europe as well as in the UK market.
Mary Blair, head of business development for Threadneedle, is eager for new Ucits legislation as it will finally make it economic to transfer her company's full range of funds into OEICs.
As soon as Ucits comes into force, Threadneedle will be converting its funds of funds, currently only available as UK unit trusts, into OEICs for sale into Europe.
She said: 'I'm assuming that we will get Ucits 2 in 2002.' On the reason for the EU hold up, Blair said: 'There has been no problem with the funds of funds aspect ' most people are happy with that.'
She said that the prospect of futures and options funds might have made some of the EU negotiators nervous, but what has really held it up is other points like capital adequacy requirements.
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