MAKING THE MOST OF UCITS IV

Client profile & objectives

retail subscribers. The confidence of the local regulator in the UCITS whole structure is critical to its success.

You are a Management Company established outside the EU (e.g. in Asia or in Latin America). You have developed your expertise in mana- ging plain vanilla or alternative funds in your domestic market. You have no experience with UCITS structures but have observed that worldwide distribution of UCITS continues to grow. Their level of pe- netration in international investment markets means that they are beyond doubt recognised as the world’s most internationally distribu- ted investment fund product. Contrary to UCITS, your domestic funds are difficult to sell in neigh- bouring countries, due to fragmentation of the market and competition between the various domiciles. Neither can they be distributed in the EU. That is why you view UCITS as a real alternative or a substitute product to your domestic funds. In your market, UCITS funds are appreciated for their regulatory cer- tainty, liquidity and transparency, which give them a definite advantage compared to other vehicles. In other words, the fact that UCITS are EU- regulated funds make them attractive within the EU, but also in Asia (where Hong Kong is a central point from which to market funds to many different Asian countries), South America, the Middle East, Swit- zerland and Eastern Europe, where some local regulators have already authorised the sale of UCITS to a broad pool of investors, including

Furthermore, from an investment policy view point, you are convinced that UCITS funds are flexible enough to give sufficient latitude to your portfolio managers to develop sophisticated and high return strategies and thus ssophisticated investment policies that UCITS products can attract higher allocations than the unregulated vehicles using the same strategy. You have built your existing organisation (asset management platform and distribution capabilities) in and for your domestic market. This struc- ture is efficient and responds well to your current needs. Objectives You want to develop your business and enter the UCITS market by launching a structure in a well established cross-border EU domicile (e.g. Luxembourg or Ireland). Indeed, you consider that the branding and in- ternational reputation of these fund domiciliations is a key advantage for distribution at a global level. Possible scenarios You may have two different approaches concerning your existing local funds: You could either keep them for domestic distribution or replace them by your new UCITS range domiciled in a cross-border distribution centre.

The possible scenarios to consider are:

Possible scenarios

Creation in addition to your local fund (e.g. Asian fund, Latin American fund) of a UCITS range in a European cross-border distribution centre (e.g. Luxembourg or Ireland)

Scenario 1

Creation of a UCITS range in a cross-border distribution centre (e.g. Luxembourg or Ireland) to replace your local fund (e.g. Asian fund, Latin American fund) and distribution of your European UCITS both in Europe and outside Europe (e.g. Asia, Latin America)

Scenario 2

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