UCITS IV: Implications for the Asset Management Industry in Europe

October 22, 2010
Industry Trends
EMEA

Abstract

The UCITS IV Directive is expected to bring greater harmonization of the European fund management marketplace. The Directive attempts to cover some of the regulatory gaps, and it is expected to boost cross-border fund management in Europe.

In a new report, UCITS IV: Implications for the Asset Management Industry in Europe, Celent looks at the evolution of the UCITS regime, the key provisions of UCITS IV, the UCITS market, and the impact of the UCITS IV Directive on various market participants

Growth and consolidation are the two emerging themes. There has been a consistent rise in UCITS launches since their inception, and the market is expected to grow, both in Europe and globally. The hedge fund industry is also showing increasing interest in the UCITS product class. The Directive provides opportunities for funds to contain costs through mergers and asset pooling. A marked increase is expected in the number of super funds taking advantage of the provisions of the new directive.

Celent believes that the key contribution of the UCITS IV directive to the asset management industry in the long term will be cost savings. Fund managers may achieve annual savings of €2 billion to €3 billion by making appropriate use of the master feeder structure provision. Modeling suggests that the master feeder structure will save fund managers 10–15% on operations and custody costs.

This report evaluates the key trends, and the challenges and opportunities in the wake of the Directive. It also provides an overview of the Directive’s provisions and their impact on market participants.

“Impact on all stakeholders is expected, though to varying degrees. Fund promoters, management companies, distributors, custodians, depositaries, agents, regulators, and investors will need to adapt to the new ecosystem that UCITS IV will create. In operational terms, the Directive will impose demands for standardized workflows, processes, and systems for all stakeholders,” says Ravi Nawal, Senior Analyst at Celent and author of the report.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

3

Introduction

5

UCITS Directive

6

UCITS IV

9

UCITS Market Overview

15

Impact of UCITS IV on Market Participants

21

Conclusion

24

Leveraging Celent’s Expertise

27

Related Celent Research

28

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