Cross-Border Distribution of UCITS

A CACEIS PRODUCT DEVELOPMENT PUBLICATION - 2011

CONTEXT

The cross-border distribution of domestic products

1.3.2

As seen above, the leadership of the Luxembourg and Irish hubs is still undoubted but in- ternational distribution is also expanding from funds domiciled in major domestic markets in Europe, such as the United Kingdom, France, Germany and to a lesser extent, Belgium. Indeed, latest trends confirm that fund houses from all over the world wanting to launch pro- ducts designed for the international market are likely to set up UCITS domiciled in Luxem- bourg or Dublin. In parallel, however, the emergence of UCITS domiciled in domestic mar- kets mirrors the slow yet constant decline of national European funds. Table 2 shows this phenomenon and gives an overview of the overall openness of European fund markets to the cross-border activity by adding the number of international UCITS re- gistered for sale in each country.

Table 2: Overview of the overall openness of European fund markets to the cross-border activity as at 31/12/2010

# of true cross-border UCITS domiciled in the country

Evolution in % between 31/12/2007 and 31/12/2010

# of foreign countries where local UCITS are distributed

# of true cross- border foreign UCITS registered for sale

The international distribution of funds is also expanding from funds domiciled in domestic markets, such as the United Kingdom, France and Germany.

Luxembourg

46,846

+26% +29%

55 37 20 39 15 22

911 918

Ireland France

8,843 1,878 1,561

+148%

3,793 3,852 2,186 5,848

United Kingdom

+28%

Belgium Germany

781 493

+6%

+28%

Source: PwC, 2008 & 2011

Hence, not all European fund houses aiming at distributing beyond borders are necessarily moving toward one of the two hubs, and sometimes decide to register their domestic UCITS in other countries for international distribution. France represents the strongest centre among all domestic European countries, in terms of funds registered for sale internatio- nally. At the end of 2010, there were 1,878 true cross-border French-domiciled UCITS, most of which being distributed within the European Union borders, but some go as far as the Americas and Asia; It should be noted that they were only 757 at the end of 2007, i.e. a 148% increase over the past 3 years, whereas the number of true cross-border Luxembourg-do- miciled funds only grew by 26% over the same period. As at 31/12/2010, there were also 1,561 British funds sold internationally in as much as 39 countries in every continent. Similarly, the German fund market is also raising its selling goals, with 493 locally domiciled international UCITS distributed in 22 countries worldwide at the end of 2010, against only 385 funds distributed in 18 countries at the end of 2007. Generally speaking, the trend of opening local UCITS funds to pan-European and even in- ternational distribution emerged a few years ago, partially slowed down during the years of financial turmoil and yet seems today to be speeding up again.

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