February 2015 - European fund industry news

The European fund industry in February

2014: a record year for Europe

In February, the European Fund and Asset Management Association (EFAMA) published its quarterly statistics and announced that 2014 had been a record year for the European fund industry.

Overall net sales rose to an all-time high of over EUR 600 billion and assets grew by nearly 16% to pass EUR 11 trillion, of which UCITS accounted for 70% and non-UCITS for 30%. UCITS net sales increased by more than 90% compared to 2013

Concerning UCITS sales, 21 countries registered net inflows in 2014, with 12 countries recording net inflows greater than EUR 1 billion and two countries recording net inflows over EUR 100 billion. Luxembourg attracted EUR 228 billion in net inflows and Ireland posted net sales of EUR 112 billion for the year. These were followed by Spain, Italy, the UK, Switzerland, Sweden and Norway. France registered net outflows of EUR 22 billion. 

Most types of funds had positive net sales for ten to twelve months of the year, with the exception of money market funds, which registered eight months of negative net sales and total outflows of EUR 5 billion for the year. Non-UCITS saw positive net sales of EUR 138 billion.

Bernard Delbecque of EFAMA  attributed the growth in 2014 to four factors: “the quest for investment returns in a context of very low interest rates; the attractiveness of investment funds in terms of investor protection; the great variety of investment strategies and risk-return profiles available in the investment fund market; and the role of central bank actions to prevent deflation and foster economic growth.”

ECON approves draft law for money market fund reform

On 26 February, the Economic and Monetary Affairs Committee of the European parliament approved a draft law intended to reform money market funds.

It was proposed to create two types of these funds: constant net asset value (CNAV) funds and variable net asset value (VNAV) funds and there would be two types of CNAV money market funds:

• Retail CNAV that would be available for subscription only for charities, non-profit organisations, public authorities and public foundations
• Public Debt CNAV which would invest 99,5% of its assets in public debt instruments.

Under the draft law, money market funds would have to report weekly a range of information to their investors and they could apply "liquidity fees" and "redemption gates" in certain circumstances to help stem sudden outflows.

Fund industry publications

There was an interesting range of publications from the European fund industry in February including:

• Luxembourg’s CSSF issued a document that describes the different feedback files and the various controls in the context of the AIFMD
• The UK’s Investment Association published a paper on comprehensive disclosure of costs and charges, which also proposed a new calculation and presentation methodology for portfolio turnover rate
• PwC published the key findings related to the asset management industry from its 18th global CEO survey
• Towers Watson released its global pensions asset study for 2015
• Deloitte Luxembourg published a wall poster on the 2015 regulatory agenda
• EY issued a wall chart on fund flows and assets of open-ended investment fund managers.

Finally, Silverfinch released a whitepaper on the benefits to asset managers of Solvency II and a film on the Fundsquare and Silverfinch solution for Solvency II look through.

This film is also available in French and Dutch.

In this context, Silverfinch also issued two surveys to assess the industry's readiness for Solvency II, one for asset managers and one for insurers.

First consultation for a capital markets union in Europe

On 18 February, the European Commission published a green paper consultation concerning the future capital markets union covering:

• Its approach to putting in place the building blocks for a capital markets union by 2019
• The underlying economic rationale
• Possible measures which could be taken to achieve this objective.

The commission is accepting responses to the green paper until 13 May 2015. 

Commenting on the consultation, EFAMA  welcomed the green paper and stated that “investors are the cornerstone of the asset management industry and that an integrated capital market in the EU will help unlock capital, shift it towards investments in long-term projects, and ultimately reduce the cost of investment funds and pensions savings for investors.”

ESMA updates and consultations

In February, ESMA, the European Securities and Markets Authority published an addendum consultation paper to the implementing rules for MiFID II/MiFIR. The consultation will close on 20 March 2015.

Also concerning MiFID II/MiFIR, on 19 February ESMA held a public hearing on this topic and published the entire video of the hearing online.

During the month, ESMA released its final report on technical advice on the delegated acts of the European social entrepreneurship funds (EuSEF) and European venture capital funds (EuVECA) regulations.

_{Published on: 2 March 2015}

Fundsquare News 17 - February 2015