Cross-Border Distribution of UCITS

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2011

CONTEXT

Only common point, the banking distribution channel occupies a dominant position in much of Continental Europe, due to their extensive existing customer base and the broad range of funds they offer. Besides, as explained earlier on, most Continental European retail investors are un- used to directly paying for financial advice, which explains the low market penetration of IFAs, who need to convince investors to pay extra fees -although fees paid to the banking sector are unclear. Nonetheless, a direct consequence of the banks’ behaviour during the crisis is indeed their losing ground: From 42% of total European fund sales in 2007 to 33% 14 in 2010. The UK is a well-known exception, as retail banks are almost insignificant while IFAs account for more that 55% of fund distribution; Their importance rising year after year. We previously talked about RDR and the effect that it may potentially have on IFAs in the country, leading to uncertainty with regards to future development of such a channel. IFAs also rose in Germany in previous years, reaching a very respectable 11% of market share in 2007 before being hit by a setback in 2009. The French market still presents the most widespread use of different channels with banks, insurance companies, funds of funds and corporates, all having a significant market share. The large market share of the institution/corporate channel in France (34% of all distribution) can be explained by the widespread company savings plans (“Plans d’Epargne Entreprise”) introduced in 1967, which are a French specificity. On the contrary, other national particularities come as no surprise, such as Spain and Italy still primarily linked to distribution via banks, as well as the predominance of private banks in Switzerland. As already mentioned, fund supermarkets and the direct channel are relatively insignificant in Europe and are not today in a position to challenge other fund distribution channels. Is this low penetration going to remain stable? The debate is on and it raises attention.

1.2

Only common point, the banking distribution channel occupies a dominant position in much of Continental Europe, due to their extensive existing customer base and the broad range of funds they offer.

14 Data Source: CACEIS analysis on data Lipper FMI Data Digest 2007 and 2010

Cross-border distribution of UCITS | page 19