A survey published by RBC Dexia Investor Services and KPMG shows how some of Europe’s largest asset managers plan to capitalise on Ucits IV and identifies how these reforms will contribute to wider changes across the European investment fund landscape.
The report, entitled "Ucits IV: Which business model for tomorrow?" says the vast majority of Ucits managers are taking a proactive approach to Ucits IV.
It found that the number of management companies will decrease, a new wave of fund mergers lies ahead, master/feeder structures will be key for new markets/client segments, and immediate cost savings are expected.
Peter De Proft, director general of the European Fund and Asset Management Association, says: "The fund industry is currently facing numerous challenges in these turbulent economic times that have impacted assets under management and profitability across the industry. One of the important strategic steps for players in the Ucits industry is to fully explore how to take advantage of Ucits IV."
According to the survey, the introduction of the Management Company Passport is one of the most landscape altering changes permitted under the new directive. The results highlight how managers will reduce the number of management companies and will need to consider the location of a centralised management company carefully, taking into account concerns surrounding tax regime (49 per cent), the regulatory framework (44 per cent) and the availability of qualified personnel (33 per cent). Luxembourg (43 per cent) and Dublin (18 per cent) will be likely winners but also the location of the group headquarters (23 per cent) is an important consideration.
The study also revealed that 49 per cent of respondents plan to restructure their fund ranges, with sub-optimal fund size and high costs to investors being key drivers. While Ucits IV will facilitate cross border fund mergers the market may also see a large number of new feeder funds which, as highlighted in the survey, will be used for targeted fund distribution and enable managers to enter new markets and segments. Again Luxembourg (81 per cent) is the favoured location for consolidating assets in master/feeder fund structures.
By far the most important advantage to Ucits IV for those asset managers polled is cost savings (43 per cent). Easier access to markets (24 per cent) and increased competitiveness (21 per cent) were also highlighted as positive outcomes of the new framework. Only two per cent of respondents said that Ucits IV brings no advantages, however 45 per cent acknowledged the absence of a tax framework is a key issue.
Jean-Michel Loehr, chief industry and government relations at RBC Dexia, says: "As the results of this survey indicate, Ucits IV is set to have a significant impact on the European investment fund industry. It is clear that the market is already readying itself to embrace this latest phase of Ucits and has made significant inroads in identifying the broad range of opportunities Ucits IV creates. As ever, education remains key to ensuring that the market continues to capitalise on regulatory changes."
