MAKING THE MOST OF UCITS IV

MANAGEMENT COMPANY SIDE On the Management Company side, the maximum level of rationalisation achievable would consist in keeping a single entity in charge of the over- sight of all your UCITS wherever they are domiciled.The main challenge is for one entity to handle the oversight and reporting regulations in force in each UCITS domicile. Necessary cooperation with the domestic depositary banks must be taken into account. For various reasons, this target might be difficult to achieve. In the his- tory of your company, you have built-up specialised centres in various countries where you intend to keep talented teams. In addition, the exis- tence of specific local non-UCITS product range might require to keep a domestic substance. Furthermore your strategy as regards to structuring and domiciling a Ma- nagement Company is closely linked to your product strategy and has to be designed with many factors in mind, mixing actual and intangible topics, such as current legal and operational set-up, existing agreements with supervisory authorities, social and tax matters, branding considera- tions, positioning regarding home and host countries, delegation flexibi- lity, product structure (single fund or master-feeder structure).

1. DISTRIBUTION DRIVEN STRATEGY In certain strategic countries where you run a high risk on non-captive investors due to addiction to changes, due to low appetite for new structures such as feeders, or simply because you want to or have to leave substance, you may decide not to process to product restructu- ring. This would typically be the case if you want to maintain a fully fledged product infrastructure in your home market and a vehicle do- miciled in an international centre for cross-border distribution. It is sim- pler: The products, specially designed for a given market, meet all local expectations perfectly and no impact on investors is anticipated. From a medium to long term perspective however, the increased cost of run- ning duplicate structures in several jurisdictions may be detrimental to your competitive positioning and marketing consistency. The plurality of providers or infrastructures may prevent you from achieving efficient management of your distribution network. UCITS IV may help you to realise economies of scale and rationali- sation. By using the European Management Company passport, you could rationalise the various Management Companies on the one hand and, by using the delegation authorisations, build-up a hub strategy for other activities which relate to your UCITS products and which are un- der the Management Company responsibilities, such as administration and distribution. “Light” transfer agency solutions exist in order to avoid possible de- legation rules hurdles. On the asset management side, asset pooling solutions can be considered but may be difficult to implement on a cross-border basis. In this context, the rationalisation driving the Management Company location should take each domestic delegation rule into consideration. 2. COST-DRIVEN STRATEGY The cross-border mergers facility is seen as the ultimate UCITS IV tool in terms of product range rationalisation. It allows not only asset ma-

Possible strategies

In our view,the product development and distribution strategies should be the starting point. The Management Company strategy and organisation of operations would logically be mapped to product organisation. Finally, restructuring and project management should be considered.

At product level, the following three principal models can coexist and be combined in order to match your organisation and objectives:

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