The European Commission is set to finalise its proposed revisions to the Ucits Directive in the coming months. How is the advent of Ucits IV likely to impact European asset managers and their service providers?
Allegra van Hovell: "Ucits IV will be a very positive development for the European asset management industry as it will remove a number of complexities and redundancies. Firstly, it will allow the use of master-feeder structures, where a Ucits fund will be allowed to fully invest its assets into another fund. This means we'll be able to have similar funds sharing the same core pot. Ucits IV will also make the whole registration process in different countries much easier, allowing investors from all across Europe to have access to the same fund at the same time, removing the current time gaps. From a fund manager point of view, it will simplify the process of publishing marketing materials for different countries. Of course the European passport feature for management companies, if it is implemented, will be very helpful. On the whole I think that Ucits IV is good news for the industry - it will speed up access to different markets and remove replications across Europe."
Paul Heffernan: "We have all seen that increased harmonisation across borders has benefited the fund industry in Europe. However, Ucits IV must ensure it addresses the concerns of all industry participants to enhance and consolidate the Ucits brand. The notification procedure is disjointed across Europe and must be tackled appropriately under the proposed changes to the directive. The industry must work together to deliver on this to reduce the burden on asset managers and increase the competitiveness of products through increased efficiencies in the asset management business. It may take more time before we see large-scale fund mergers, despite any measures Ucits IV will introduce. At the very least, Ucits IV should help to level the playing field, benefiting asset management and asset servicing industries. Ireland and Luxembourg are globally recognised as two able and competitive cross-border Ucits centres. In particular, Ireland is well placed to benefit from opportunities that might be presented when the management companies' passport initiative is introduced."
Richard Pettifer: "The Ucits IV proposals will, if fully implemented, provide retail fund managers with a never-seen-before opportunity to restructure their fund ranges across Europe. The big question is whether product managers and distribution heads can rise to the challenge and take full advantage of the opportunities presented. For too long innovation in product design and distribution has been too difficult and so the industry has taken the line of least resistance with funds gravitating to the same domiciles. The opportunities for cost savings that cross-border pooling, cross-border mergers and the management company passport will bring are immense. Managers will finally be able to rationalise ranges across Europe. Mergers will facilitate the changes required and management companies will make use of the opportunities presented by the passport. However, the optimum structure is far from clear and will vary according to the strengths and legacy product set of each group. In this case waiting to see what others do will not be the best answer."
Tony Johnson: "Ucits IV could potentially open up a range of exciting new opportunities for asset managers and service providers alike. The broadened scope of investment instruments and market approaches likely to be permitted within the new Ucits wrapper - such as the widened use of derivatives - could seriously spur fund manager innovation via the development of attractive new product ranges. The advent of Ucits IV may also encourage greater asset management efficiencies through mergers of existing fund structures. As global growth in demand for Ucits funds increases, an increasingly critical role is emerging for administrators to promote and support seamless alignment between fund manufacturers and distributors. Going forward, committed service providers must also work to enhance their critical support for the back and middle-office needs of the expanding Ucits fund range - via third-party administration, transfer agency, data management, complex performance analysis/reporting and the development of common industry standards."
- Allegra van Hovell, head of product management and client solutions, F&C
- Paul Heffernan, business development manager, Bank of Ireland Securities Services
- Richard Pettifer, director, Investment Management Practice, KPMG LLP
- Tony Johnson, global head of sales and relationship management, RBC Dexia Investor Services.
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