RETHINKING DISTRIBUTION

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Scenario Planning Substitute Products

Figure 17

Fair Competition

Unmatched needs

Investors looking for efficient solutions can make an informed choice between funds and substitute products.

Despite comparable requirements, AM products do not manage to offer the investors the same levels of product efficiency as structured and insurance products.

Low Transparency Comparable Non- comparable

Business as usual

Limited comparability

Investors can choose between efficient solutions provided by AMs and other industries. However, the comparability of products across various industries will remain limited.

AM products lag behind substitute products which are able to offer more efficient solutions to investors without transparency requirements and related burden.

Fund product efficiency

High

Themost common types of substitute products for investment funds according to EFAMA are structured products, closed- ended funds and Euro Medium Term Notes that are linked to an underlying index. Products which provide exposure to asset management strategies that are typical for investment funds

(both active and passive strategies) andwhich promise fund-like returns, often linked to equity, commodity or property indices, and often generated through the use of derivatives without direct investment in the underlying asset can be considered as substitute products to investment funds.

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