Cross-Border Distribution of UCITS

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2011

CONTEXT

1.2

Fund sales trends in Europe

When analysing fund sales, one has to take into consideration the different fund investors. By definition, investors are the parties whose money is invested in funds and who benefit from the performance of such investments. An investor can either be retail – an individual who purchases small amounts of fund shares/ units for him/herself – or institutional, i.e. an entity with large amounts to invest in funds, such as banks, mutual funds, insurance companies, pension funds, foundations and so forth. Institu- tional investors account for the majority of overall volume. Retail and institutional investors dif- fer of course by nature, but also in terms of the sales and marketing approach, reporting needs, and long term investment views. This guide focuses on the distribution of UCITS, which are the retail investment fund product by definition: Since their creation they have been representing the highest investor protection tool worldwide. Having said so, in the fund distribution context, onemust distinguish between public distribution and private placement. The first one is the sale of units/shares of funds to the retail investors, while the latter is the sale directly to an institutional investor of funds’ units/shares. Provided that the units/shares of funds are bought for investment purposes rather than resale, private placement does not require the registration of foreign funds with local authorities.

1.2

In the following chapters we will analyse the whole spectrum of fund sales by dealing sepa- rately with sales to the institutional sector and the private sector.

Fund sales to insurers, pension funds and other financial intermediaries

1.2.1

According to the European Fund and Asset Management Association (EFAMA) and the Euro- pean Central Bank (ECB), investment funds account for more than a quarter of total financial assets of insurers and pension funds in Europe, as displayed in graph 6.

40% 14.0 share in percent of total Graph 6: Main financial assets of insurers and pension funds 60% 80% 100% 22.4 23.4 24.0 22.3 25.9 19.5 14.1 14.6 8.7 7.9 14.3 44.7 43.1 42.8 47.2 46.6 46.2

Legend

Investment funds Debt securities Quoted shares Currency & deposits

20%

17.9

15.7

15.8

16.0

14.8

15.2

0%

2004

2005

2006

2007

2008

2009

Source: EFAMA fact book 2010, ECB, 2009

Cross-border distribution of UCITS | page 15