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Laxman Pai, Opalesque Asia:

Assets held in UCITS funds could quadruple to reach EUR 42 trillion ($48.83tn) in 30 years, according to research by the Association of the Luxembourg Fund Industry (ALFI).

The study claims that the assets in UCITS funds have the potential to grow at a compound rate of 5% over the next three decades, with average annual net sales flows rising from EUR 201 billion in 2017 to EUR860 billion by 2048.

However, this would only be possible if certain risk factors - such as measures to guard against a flash crash in relatively illiquid sectors - are addressed, the trade body warned in the report.

The study, which was produced by Broadridge, also predicts that Europe's Capital Markets Union and local initiatives to enhance long-term savings to meet demographic challenges will encourage future growth in Europe.

Outside Europe regulators are likely to wish to protect their own markets, but the strength of the UCITS brand means that the UCITS structure is most likely to be the adopted vehicle.

A press release from ALFI quoted Denise Voss, Chairman as saying: "The global footprint of UCITS bodes well for the coming decade as populations in many of the newer markets are encouraged by their governments to take on the mantle of pension provision. Regulators in most non-European countries will wish to build a local fund franchise, but the regulatory structures they use are most likely to be based on UCITS. This can only be good new......................

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