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EFAMA meets the Singapore
Investment Management Community
UCITS: A unique global brand
Singapore, 5 November 2007
UCITS: A unique global brand
Mathias Bauer, President, EFAMA
Steffen Matthias, Secretary General, EFAMA
Charles Muller, Deputy Director General, ALFI
Gary Palmer, Chief Executive, IFIA
Hans Janssen Daalen, Director General, DUFAS
On the agenda today
� Mathias Bauer: – EFAMA - Associations & Corporations united to meet future
challenges
� Steffen Matthias:– From the 1985 UCITS Directive to UCITS IV and beyond
� Gary Palmer
2Singapore, 5 November 2007
� Gary Palmer– Implementation of UCITS III and its impact on local distribution:
an industry panel
� Charles Muller– The Global dimension of UCITS
� Q & A
Mathias Bauer
EFAMA: Associations & Corporations
3Singapore, 5 November 2007
Associations & Corporationsunited to meet future challenges
EFAMA-Land
24 Countries:� 20 EU Members
and� Liechtenstein� Norway� Switzerland� Turkey
4Singapore, 5 November 2007
� Turkey
2 countries with observer status
45 Corporate Members
= Investment Management: more than EUR 16 trillion of which EUR 7.9 trillion through over 46,000 investment funds
EFAMA
is the representative association for the European investment management industry. Its mission is :
� To support a high level of investor protection through the promotion of high ethical standards, integrity & professionalism across the industry
5Singapore, 5 November 2007
� To promote the completion of an effective single market for investment management and the creation of a level playing field for competing savings/investment products
� To strengthen the competitiveness of the industry in terms of cost & quality by seeking & obtaining improvements in the legal, fiscal and regulatory environment
45 EFAMA Corporate Members
Allianz Global Investors – Anima – Axa Investment Managers –Barclays Global Investors - BBVA Gestion – BlackRock –
BNP Paribas AM – CAAM sgr - Capital International –Capitalia AM - Carmignac Gestion –- Cominvest –
Crédit Agricole AM – Crédit Suisse - DekaBank – DWS –Ecureuil Gestion – Eurizon Capital – Franklin Templeton -
Goldman Sachs AM – HSBC -Investments - ING IM –
6Singapore, 5 November 2007
Goldman Sachs AM – HSBC -Investments - ING IM –Inverseguros - Invesco – IS AM - JP Morgan - Julius Bär –
KBC AM – Lombard Odier Darier Hentsch & Cie – Lyxor AM -M&G International – Monte Paschi AM –
Nordea Investment Funds – Pictet AM – Pioneer Global AM –Raiffeisen Capital Management – Robeco – Santander AM –
Schroders – Skagen Funds – Société Générale AM –The Bank of New York Mellon – Threadneedle - Union Investment
Sweden:150
UK: 900
Ireland: 813
Germany: 1,060
Top 10 Fund Domiciles at end June 2007(Total net assets in EUR billions)
8Singapore, 5 November 2007
France: 1,637
Spain: 292Italy: 365
Austria: 174Luxembourg: 2,047
Switzerland: 155
The secret of the UCITS success (1)
Directive 85/611/EEC (modified in 2001) is a product directive (with additional regulation of the management company)
� aimed at:– Approximating conditions of competition– Ensuring more effective & more uniform investor protection
12Singapore, 5 November 2007
– Ensuring more effective & more uniform investor protection– Simplifying cross-border distribution– Helping to bring about a European capital market
� And based on three principles:– Minimum harmonisation of national legislation– Home-country control – Mutual recognition
The secret of the UCITS success (2)
Ensuring more effective & more uniform investor protection
� 4 cornerstones
– Comprehensive information to investors
13Singapore, 5 November 2007
– Comprehensive information to investors– Effective supervision of fund & management company– Meaningful diversification in tradable and liquid
instruments– Separation of management and safekeeping of
assets
The secret of the UCITS success (3)
� UCITS are harmonised products and can be set up in all EU Member States
� As they are harmonised products and benefit
14Singapore, 5 November 2007
� As they are harmonised products and benefit from a European passport, they provide for the same level of investor protection independent of the jurisdiction where they are set up
EFAMA strategic goals 2007/ 2008
Three main areas:
Safeguarding the global UCITS brand and the worldwide competitiveness
15Singapore, 5 November 2007
worldwide competitiveness(later Charles Muller)
Single Market including Regulation & Pension
Industry standards
A Single Market means:
� Facilitate the successful development of the European investment fund industry
� Create a real level playing field� Increase the global competitiveness of the
16Singapore, 5 November 2007
� Increase the global competitiveness of the European investment fund industry
� Create a real single market for occupational pensions
Level Playing Field means:
� Comparable conditions for substitute retail savings products at the point of sale
17Singapore, 5 November 2007
� Comparable conditions for all competing products and services in the second & third pillar pensions market
Pensions: The good news
� European Ministers of Finance acknowledged the need for creating a Single Market & ensuring a level playing field across the pension market
� The European Commission took this on board
18Singapore, 5 November 2007
� The European Commission took this on board and underlined that an EU framework must enable a competitive, open and effective market for long-term savings, retirement and pension
EFAMA tries to advance the discussion
� EFAMA commissioned two studies:
– One on DC schemes to evaluate the advantages and perceived risks of DC schemes
– Another on the asset-management solutions for the pay-out (decumulation) phase and the pros and cons of these solutions compared to annuities
19Singapore, 5 November 2007
compared to annuities
� The studies will be used to:
– Highlight the ability of asset managers to offer appropriate pension products, including under the Pension Directive
– Further develop the European Personal Pension Account (EPPA) concept
Industry Standards
� Two levels:– High Level Principles & Industry Best Practices to
maintain investor trust– Technical industry standards to increase efficiency
� 2007/08 focusing on technical standards
20Singapore, 5 November 2007
� 2007/08 focusing on technical standards– Promoting the agreed fund processing standards to
make them effective industry standards– Continuing work on fund categorisation and
monitoring implementation of agreed standards
Steffen Matthias
From the 1985 UCITS Directive
21Singapore, 5 November 2007
From the 1985 UCITS Directive
to
UCITS IV and beyond
From UCITS I to UCITS IV
> UCITS I :Principles for harmonisation
>> UCITS IIDid not happen because of lack of common understanding
>>> UCITS III
22Singapore, 5 November 2007
>>> UCITS IIIbroadening of investment possibilities, management company & Simplified Prospectus
>>>> UCITS IVcompleting the Single Market and increasing efficiency
The regulatory agenda
� After :– extensive discussions in expert groups and Public
Hearings– The November 2006 White Paper– The publication of « initial orientations for adjustment
to the UCITS Directive » in March 2007A public Hearing in April 2007
23Singapore, 5 November 2007
– A public Hearing in April 2007– And a public Consultation
� The Commission’s legislative proposal is planned for end January 2008
� The intention is to agree on Level I legislation by end 2008
The good news:
� The Commission’s proposal will be very much in line with the most urgent needs of the industry:– A short and easy notification procedure– A possibility to launch & manage funds across borders
(management company passport)– Creation of a framework for (cross-border) fund mergers
24Singapore, 5 November 2007
– Creation of a framework for (cross-border) fund mergers– Possibility of so-called master-feeder structures as
pooling mechanism– Better information of investors: from the Simplified
Prospectus to KID (Key Investor Disclosure)– Strengthening of cooperation among supervisors
UCITS: not yet at the finishing line
To support the Commission in implementing the proposed measures is our highest priority, but
– It is still not clear what additional regulation is needed to enable regulators to fulfil their supervisory duties
– It is still not clear how KID will look. In any case it must exclude any possibility for goldplating by
25Singapore, 5 November 2007
must exclude any possibility for goldplating by Member States and additional demands by distributors; possibly: “risk-reward” indicators
– Even if there is appropriate regulation, fund mergers will only take place if they are tax neutral. To achieve this, the Commission should at least consider regulation
… in the medium term
� A pan-European regulatory framework is needed for:
– Other publicly offered funds such as � Open-ended real estate funds� Funds of hedge funds
26Singapore, 5 November 2007
� Funds of hedge funds
– Distribution to qualified investors
Gary Palmer
Implementation of UCITS III
27Singapore, 5 November 2007
Implementation of UCITS III
And its impact on local distribution
UCITS III
2 Directives (Entry into force: 13/02/2002)
� Management Company Directive– Authorisation/Supervision of Management Companies
– Capital Requirement
– Simplified Prospectus
28Singapore, 5 November 2007
� Product Directive - Expands investment powers of UCITS– Fund of Funds
– Index Funds
– Money Market Funds
– Use of Derivatives
Product Directive Issues Addressed
� Eligible Assets
� Index funds – what indices
29Singapore, 5 November 2007
� Use of Derivatives – Risk Management Process
Implementation of UCITS III and its impact on local distribution
Panel Discussion
30Singapore, 5 November 2007
Charles Muller
The Global Dimension of UCITS
31Singapore, 5 November 2007
The Global Dimension of UCITS
Worldwide Investment Fund Assets(market shares in % end 2006 – Europe: only UCITS)
32Singapore, 5 November 2007
The global dimension of UCITS (1)
� UCITS: the only truly globally distributed fund product
� Footprint in over 50 countries� The 2 main distribution regions outside Europe:
– Asia & South America
� UCITS in Asia are particularly strong in:
33Singapore, 5 November 2007
� UCITS in Asia are particularly strong in:– Hong Kong, Singapore, Taiwan– With + 70% market penetration
� In South America UCITS are mainly used as investment for pension funds
The global dimension of UCITS (2)
� Main European hubs for global distribution: Ireland & Luxembourg
� However, UCITS are harmonised products and can be set up in all EU Member States
34Singapore, 5 November 2007
� As they are harmonised products they provide for the same level of investor protection independent of the jurisdiction where they are set up
Fund distribution at a glance …
Dec 05 Dec 06Variation
06/05
True cross-border fund registrations 36 411 43 304 19%
35Singapore, 5 November 2007
Sources : Lipper Hindsight 31/12/2006, PWC Global F und Distribution 2007
True cross-border funds 5 170 5 907 14%
Registrations per true cross-border fund 7.1 7.3 2.8%
Leading cross-border management groupsSources : Lipper Hindsight 31/12/2006, PWC Global F und Distribution 2007
Management group nameNumberof funds
Countriesof sale
Franklin Templeton 57 34
BlackRock (Luxembourg) S.A. 61 33
HSBC Holdings 53 33
BNP Paribas 98 30
Fidelity Investments Luxembourg S.A. 129 29
36Singapore, 5 November 2007
Fidelity Investments Luxembourg S.A. 129 29
UBS 237 28
ABN AMRO 182 28
Société Générale Asset Management 63 28
JPMorgan Asset Management 159 27
INVESCO 36 27
Credit Suisse 142 26
Allianz Global Investors 131 25
Leading cross-border management groupsSources : Lipper Hindsight 31/12/2006, PWC Global F und Distribution 2007
(Continued )
Management group nameNumberof funds
Countriesof sale
Schroder Investment Management (Luxembourg) S.A. 97 25
ING Investment Management Luxembourg 178 24
Pioneer Asset Management S.A 132 22
Aberdeen Asset Managers 24 22
Crédit Agricole 121 21
AllianceBernstein (Luxembourg) S.A. 56 21
37Singapore, 5 November 2007
AllianceBernstein (Luxembourg) S.A. 56 21
Baring Asset Management 53 21
Mellon 32 21
Legg Mason 61 20
Morgan Stanley Asset Management 53 20
MFS 30 20
Gartmore Investment Limited 18 20
Henderson 18 20
The top 10 countries of distribution outside Europe
Number of top 50 fund managers
Japan
Korea
Bahrain
Turkey
38Singapore, 5 November 2007
Sources : Lipper Hindsight 31/12/2006, PWC Global F und Distribution 2007
0 5 10 15 20 25 30 35 40
Singapore
Chile
Hong Kong
Taiwan
Peru
Macao
The global dimension of UCITS (3)
UCITS
Regulated in the interest of Investor protection
39Singapore, 5 November 2007
Regulated in the interest of Investor protection
Useful contacts & links
Contact us:EFAMA - the European Fund and Asset Management Assoc iation
Address: Square de Meeûs, 18/2, B-1050 Brussels, Be lgiumTel. +32 (2) 513 3969, Fax + 32 (2) 513 2643
E-mail: [email protected]: www.efama.org
41Singapore, 5 November 2007
Website: www.efama.org
� Link to the website of the European Commission’s In ternal Market DG/Securities & Investment/Asset Management (Investment Funds): http://ec.europa.eu/internal_market/securities/ucit s/index_en.htm
� Link to the Committee of European Securities Regula tors (CESR): http://www.cesr-eu.org