Industry Updates

Focus on cross border funds (UCITS): A powerful tool in the fund promoter's armory

Friday, February 26, 2010

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Opalesque Industry Update - According to the 1Q 2010 issue of the Cerulli Edge: Europe Edition, the market for UCITS funds is poised for further growth as alternative and long-only managers seek opportunities to expand their global reach.

Although 2008 was a challenging year for European investment managers—many funds experienced redemptions as investors moved into cash—assets under management in UCITS has steadily recovered to reach more than €2 trillion year-to-date through August 2009. During the same period, net new inflows exceeded €70 billion with Luxembourg-domiciled funds accounting for a significant proportion of sales.

While Continental Europe remains the hub of most European distribution strategies, the popularity of the UCITS brand is such that markets in Asia are becoming key sources of sales revenue for major asset management firms. Yet Cerulli analysts believe that the access to some global emerging markets will only come through setting-up onshore structures.

Traditional long-only funds currently dominate UCITS sales, but Barbara Wall, editor of the Cerulli Edge- Europe edition says, "A sharp increase in the number of alternative UCITS fund products in circulation suggests that hedge funds, including fund of hedge funds, will become an important feature of the cross-border fund landscape."

Other findings in this issue:
Dublin may have the edge in exotic assets, but both the Irish and Luxembourg domiciles will benefit from other intra-Europe relocations, mergers, and rationalizations.
Sales of offshore funds in the United Kingdom have been anemic. While the Treasury has taken steps to improve the lot of offshore funds in the United Kingdom, the new regime is unlikely to offer significant benefits to investors
Switzerland's financial services providers are being forced to come onside in trade for access to significant segments of foreign customers and non-domestic asset pools.

A recovery in Europe's battered property market has piqued the interest of investors, however European data has yet to reflect significant inflows in key fund markets. -KM- Corporate website: Source

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