Just when you get used to a new UCITS on the block, someone comes along and runs off with it.
This time around it’s Newcits, a type of UCITS that uses derivatives and sophisticated investment strategies. But the European Fund and Asset Management Association (EFAMA) has put out a statement seeking to drop the name and so protect what it calls the “integrity of the UCITS brand worldwide.”
The EFAMA says its research proves that Newcits are neither new products nor a new category of funds, rather they could be more accurately described as UCITS aiming actively to manage the risk-return trade-off. What’s more, the EFAMA points out this type of product is subject to and is managed in compliance with the UCITS framework and, as such, offer the same level of investor protection as other UCITS.
Peter De Proft, Director General of EFAMA, says, “The ‘Newcits’ label was coined by the media and should not be adopted by the industry or regulators. We do not believe that it is necessary or beneficial to have a specific label for these funds. The universe of UCITS is evolving but this is encompassed by the UCITS regulatory framework.
Moreover, the regulatory requirements and supervisory tools are being developed, especially under the UCITS IV framework, which enters into force on 1 July 2011.”
Now you know you can’t label it, how about asking, “Anyone for a xxxits?” www.efama.org
All-day event on 24 April
Consequences could be more severe than in stress tests
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