Now that so many of the frauds perpetrated on unsuspecting investors during the heyday of the boom have come home to roost, the unrivalled reputation for high standards of UCITS (Undertakings for Collective Investments in Transferable Securities) funds has given them a tremendous boost in the market. Many hedge funds are now running UCITS-branded funds instead of the more esoteric vehicles they favored prior to the crash.
The original UCITS directive appeared in 1985 and by June 2009 UCITS assets totaled close to €4.8 trillion. In December 2009 State Street’s Vision series reported on the prospects for UCITS IV [PDF, 1.0 MB], a directive that directly addresses the issue of cross-border funds. Since approximately 40% of UCITS funds are bought by investors outside the EU, in Asia, the Middle East, and Latin America, they are far and away Europe’s most successful financial services export, meeting the needs of both retail and institutional investors.
The strength of the brand is that it offers transparency, strong governance, and firm regulatory oversight—all qualities that retail investors in particular prize highly.
From the providers’ point of view, the continuous evolution of the UCITS legal and regulatory environment has allowed fund promoters to enhance their product range to meet the evolving needs of European and global investors. The new UCITS IV directive, which must be implemented into EU member state law by mid-2011, continues this by addressing the difficulties of marketing funds across the borders of the 27 member states, in particular the different tax regimes and variations in user preferences. The huge benefit for fund managers is that they will be able to manage their businesses on a truly pan-European basis. It seems clear that the UCITS brand will not be diminished by this latest addition…
Further reading for UCITS
- Using Structured Products to Manage Liabilities, by Shane Edwards
- Hedge Fund Challenges Extend Beyond Regulation, by Kevin Burrows
- Best Practice in Investment Governance for Pension Funds, by Roger Urwin
Tags: hedge funds , insurance , regulation , transparency , UCITS