MAKING THE MOST OF UCITS IV

Introduction

Although the EU investment fund industry has reached an historic level in terms of assets, the reality is that too many small funds still exist in Europe and that the UCITS Directive 1 , unless modernised in 2001 by the so-called UCITS III Directives 2 , was still restrictive and hampered the in- dustry’s efforts to create an efficient single market framework. Removing the various barriers that obstruct the consolidation of the European fund market while harmonising the rules across all Member States has been a long-term project initiated in 2005 by the Green Paper 3 . The UCITS IV Directive 4 , which will be implemented in national laws of all Member States as of 1st July 2011 at the latest, brings additional building blocks regarding the product side, as well as the Management Company side.

solution through UCITS master-feeder structures when business demands duplication of a product range.

A specific focus on the major tools introduced by the new regulation can be found in the fact sheets included with this brochure, with a brief des- cription of their objectives and benefits, their key features, some points of attention, as well as the main questions that Management Companies should address. It should be noted that the power of the UCITS IV toolbox does not come from the different measures taken separately, but mainly resides in the various possible combinations of these tools to offer more suitable opportunities to Management Companies and self-ma- naged SICAVs, depending on their profile. In addition, the cross-border dimension of these elements renders the definition of a strategy more complex but increases the probability of finding the right solution. For instance, the master-feeder structure can be considered for both rationa- lisation and business development strategies. On one hand, transforming a domestic fund into a feeder investing in your “international” flagship platform will enhance the oversight and reduce running costs (pooling benefit). On the other hand, launching an “international” feeder of your existing platform, which was initially designed for domestic distribution, will enhance your distribution capabilities. However, the UCITS IV toolbox is not self-sufficient and reliance on service providers such as CACEIS, with international expertise, in particular in terms of cross-border fund mergers, fund distribution support and project management, is of paramount importance.

The UCITS IV toolbox

The various new tools introduced by the Directive – notably the simpli- fication of the cross-border notification procedure, the European Ma- nagement Company passport, the UCITS mergers, as well as the UCITS master-feeder structures – will undoubtedly provide Management Com- panies with new business and cost saving opportunities, through greater flexibility in fund distribution in Europe and economies of scale. Thus, the new regulation will facilitate cross-border mergers when rationalisation is essential to fund sponsors and will introduce a passportable asset pooling

The 5 tools introduced by UCITS IV

Key Investor Information Document

1 Council Directive 85/611/EC of 20 December 1985 on the coordination of laws regulations and administrative provisions relating to undertakings for collective investments 2 Directive 2001/107/EC relating to Management Companies and the Directive 2001/108/EC relating to products, both dated 21 st January 2002 3 European Commission Green Paper on the enhancement of the European

UCITS IV €

UCITS IV €

UCITS Mergers

Notification procedure

UCITS IV €

framework of investment funds, COM (2005) 314 4 Directive 2009/65/EC of the European Parliament and of the Council of 13th July 2009

UCITS IV €

Management Company Passport

Master-Feeder structures

CACEIS - UCITS IV |  page 1