Cross-Border Distribution of UCITS

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2011

CONTEXT

Their penetration share increased by more than 5% over the 2004-2009 interval and this, despite the crisis. When analysing this trend, it seems clear that investment funds earned extra exposure thanks to a decrease of direct share holding in insurers’ portfolios. There seems, however, to be room for further modifications and hope from the asset mana- gement industry to gain extra exposure in insurance and pension fund portfolios, seen as tomorrow’s likely winners. In a continent that is quickly ageing and that should reach the worrisome barrier of 50% of population aged 55 and over by 2050, pensions and life insurance products have mar- ket share to gain in households savings. Moreover, most European countries have a pay- as-you-go state-based pension system, and the recent crisis of some Southern European countries created the fear that Member States may not be able to pay off state pensions, or will have to diminish drastically their real value. Hence, the expected rise of pillar 2 and 3 pensions in most European countries. In the Cerulli Associates survey mentioned above, respondents viewed “investing for retirement” as the main source of growth for the fund management industry in the next years. Besides, according to EFAMA, other financial intermediaries (OFIs) held EUR 6.8bn financial assets at the end of 2009, of which 9.9% was invested in funds, as shown by graph 7. The analysis of OFIs’ holdings of funds assets is of particular interest as they include funds of funds, whose distribution patterns are still quite vague.

In the 2005-2009 interval, OFIs, insurance and pension funds clearly contributed for the totality of the investment fund asset growth.

40% 10.9 share in percent of total Graph 7: Main financial assets of other financial intermediaries 60% 80% 100% 34.7 33.9 31.8 34.5 35.1 41.3 10.0 10.6 9.9 9.9 8.9 33.0 33.3 32.8 21.8 26.3 28.7

Legend

Debt securities

20%

33.7

28.7

Quoted shares Investment funds Currency & deposits

24.6

22.4

22.2

21.2

0%

2004

2005

2006

2007

2008

2009

Source: EFAMA fact book, 2010

In the 2005-2009 interval, OFIs, insurance and pension funds clearly contributed for the tota- lity of the investment fund asset growth, reporting respectively a positive net flow of € 235bn and € 489bn.

page 16 | Cross-border distribution of UCITS