February 2014 - European fund industry news

European Fund Industry News

Agreement on UCITS V

On 25 February, the European Parliament and the Council reached an agreement on UCITS V, the latest revision of the directive on Undertakings for Collective Investment in Transferable Securities.

UCITS V, which first began to be discussed in 2009, includes changes to:

• depositary functions, whereby investors will always have the right of redress directly against the depositary in the event of any loss of UCITS assets held in custody
• remuneration policies, including principles to reduce incentives for excessive risk-taking
• sanctions, to ensure, among others, effective cooperation between authorities.

In a press release, Commissioner Michel Barnier hailed the agreement as “an important achievement [that] will benefit consumers throughout Europe”.

 It is expected that UCITS V will be fully implemented by the first quarter of 2016.

2013: a good year for European funds

During the month, EFAMA, the European Fund and Asset Management Association published end of year figures as provided by twenty-six national associations.

Overall 2013 was a good year for the European fund industry.

Net sales of UCITS and non-UCITS reached 401 billion euros, compared to 308 billion euros in 2012. In all, there were only two months, June and September, when net sales were negative. Equity and balanced funds saw strong inflows compared to the previous year. Bond funds also registered inflows but these were lower than the year before.

The exception was money market funds, which recorded 91 billion euros of net outflows. This follows a previous year of net outflows for these funds.

Overall, net assets of UCITS and non-UCITS increased to 9,727 billion euros against 8,916 billion euros at the end of 2012.

ESMA launches one-stop shop for investment information

Also on 25 February, ESMA, the European Securities and Markets Authority, opened new consolidated registers.

These are tools to find information currently published on the websites of the national authorities of thirty-one European Economic Area member states. They aim to enhance investor protection by improving transparency and providing the public with access to official information.

For investment funds, they provide access to lists of:

• UCITS management companies
• Alternative investment fund managers.

Cautions on marketing and sale of complex products.

ESMA published an opinion paper on 7 February covering practices to be observed by investment firms when selling complex financial products to investors.

On the same day, it released a  Europe-wide investor warning, destined for retail investors, on the risks of investing in these products.

IMA recommendations on use of dealing commission for research

The UK’s Investment Management Association, the IMA, published a report in February entitled “The Use of Dealing Commission for the Purchase of Investment Research”, which reviews the benefits and challenges of the current model.

The report focuses exclusively on external research for equities, as purchased by asset managers to assist them in their investment decisions. Typically, the cost of this research is passed on to investors.

The IMA reports identifies possible conflicts of interest between the manager and the investor and proposes eight action steps to improve the current situation.

A look forward to the ALFI Spring Conference

The popular ALFI Spring Conference  will take place in Luxembourg on 18 and 19 March.   This event regularly attracts the biggest names in the fund industry from Europe, the US, Asia and the Middle East. This year’s conference will be examining at a large variety of topics. Fundsquare is proud to be sponsor and exhibitor at this event and we look forward to seeing you there!

_{Published on: 28 February 2014}

Fundsquare News 7 - February 2014