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Celent report reveals cost benefits of UCITS IV

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Global research and advisory firm, Celent, have published a report this week on the potential impact of UCITS IV, believi

Global research and advisory firm, Celent, have published a report this week on the potential impact of UCITS IV, believing that cost savings of EUR2 to EUR3 billion could be realized by fund managers by utilizing the master/feeder structure. Entitled UCITS IV: Implications for the Asset Management Industry in Europe, Celent looked at the evolution of UCITS, key provisions of UCITS IV and the impact on market participants. The single most important factor underscored in the report is the potential long-term cost savings of UCITS IV to the industry. It found that, if used properly, the master/feeder structure could save fund managers 10 to 15 per cent in operational and custodial costs; not an insignificant number. The report suggested that growth and consolidation were the two big themes emerging in the UCITS space, as interest and fund launches grow both within Europe and globally. Indeed, in a recent report EFAMA calculated that net assets in UCITS had risen 0.7 per cent this year to EUR5,536 billion. UCITS IV does, in the report’s view, provide opportunities for managers to contain costs by merging or pooling assets, but it should be pointed out that unless the EU adopts a tax neutral initiative, enjoying the full benefits of UCITS IV will not be possible, particularly with respect to master/feeder transactions. Ravi Nawal (pictured), a Celent Senior Analyst and author of the report said: “In operational terms, the Directive will impose demands for standardized workflows, processes, and systems for all stakeholders.”

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