MAKING THE MOST OF UCITS IV

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nagement, distribution and operating processes to be improved, but also your governance, product development and marketing efforts can be centralised on a single platform. It also simplifies KIID production. On the other hand, the fund merger facility is seen as the most ag- gressive solution. Indeed, depending on your current set-up, one can anticipate tax impacts at investor, fund and Management Company levels. In addition, it creates uncertainty on investors’ retention rate. This solution is to be kept in mind for a medium to long term objective, but should already be considered in certain circumstances where you are sure your investors will follow your restructuring decision, for non- strategic markets or small non-profitable funds. The timeline has to be taken into consideration, and restructuring could already take place under UCITS III between funds located in a same jurisdiction, at a lower cost and with little impact on investors. 3. MITIGATING STRATEGY Without aiming for the efficiency of processes and the cost optimisa- tion of a single product range, restructuring your cross-border product range into a master-feeder platform may provide you with a material

cost improvement compared to Strategy 1, whilst lowering the risk of losing investors compared to Strategy 2. As such, a mitigating strategy can be built as a transitory or target solution. Cost-wise, master-feeder structures allow managers to realise econo- mies of scale on the major portion of the activity relating to a fund’s assets. Judiciously combining the passport for Management Compa- nies with the local regulations regarding delegations will allow further savings on operations, risk monitoring and governance, without totally removing duplication (KIID, governance, depositary functions, etc.). Transforming funds into feeders allows managers to keep the exiting relationship between domestic funds and local investors. Precise as- sessment of local investor appetite for feeder structures should howe- ver be performed. Structuring solutions can help smooth the una- voidable duplication of cost inherent in double layer structures and safekeep local tax benefits. From a marketing viewpoint, showing investment performance on a look-through principle basis will be essential. In addition, particular at- tention should be paid to distribution constraints that may be imposed by non-EU countries.

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CACEIS - UCITS IV |  page 19