"UCITS promoters have moved beyond their original goal of distributing and selling robust, well-regulated investment funds to retail investors across the European Union and are now widely distributing in regions such as Asia, Latin America and Africa," said Jose Placido, Chief Executive Officer, RBC Dexia. "Our research also indicates they hold broad and growing appeal to institutional investors."
"Despite the tremendous success of the UCITS framework to date, the findings of this survey indicate there are substantial future opportunities for fund managers with a solid product offering and a track record of performance," said Tony Johnson, Global Head of Sales and Relationship Management at RBC Dexia. "This global passport provides significant opportunities for U.S. fund managers to scale up, create strategic alliances and build their businesses globally at low cost."
UCITS is a series of European Union financial regulatory initiatives dating to the mid-1980s, created to allow fund managers to operate across borders within the European Union under the same set of rules and regulations. According to the survey, the innovation and product development enabled through UCITS registration has helped fund managers attract, retain, motivate and deploy talent. Most of the innovation has been targeted at customising existing products. 82% of fund managers name 'rapid product development' as a key advantage to UCITS registration. As a result, retail investors in Europe have almost four times as much choice of funds as those in the US.
The result is a net benefit for both fund managers and investors. According to fund managers, the three main benefits for clients have been:
- Greater access to a range of trusted brands (64%).
- Greater transparency in investment strategies (62%).
- More customised solutions for clients (60%).
Despite the obvious benefits of registration, the report found many fund managers outside the EU have not yet registered under the UCITS regime. The most common reasons fund managers cite for not registering include:
- Lack of familiarity with UCITS.
- Deliberate focus on their domestic markets, which are perceived as more profitable.
- Difficulty in finding alliance partners.
- Perception of onerous regulation both inside and outside Europe.
- Difficulty making contacts in diverse linguistic and cultural settings.
The report also pointed to the emergence of third-party administrators as helping to enable specialist and mid-market American fund managers to compete effectively with the larger players for the global investment dollar. "The report highlights the need for fund managers to focus on their core competencies in manufacturing, while outsourcing non-core activities to third-party administrators and distributors, enabling the growth of the business and client service, while removing systemic inefficiencies in the industry," said Amin Rajan, CEO of CREATE-Research and author of the report.
