Fund Forum Monaco 2010

A global cross-border distribution

le 24/06/2010 L'AGEFI Hebdo

The market for cross-border funds is growing, according to the latest « Global Fund Distribution Poster » by PricewaterhouseCoopers.

No rationalisation in Europe (chart 1)

As yet, there are few signs of a rationalisation of product ranges, since the number of cross-border UCITS (distributed in at least three countries) registered in Europe increased in 2009 to almost 50,000 (+4%). However, the number fell in Asia-Pacific (-8%) and the Middle East (-11%). But the exportability of European products beyond Europe’s borders has been confirmed: there are more than 4,000 Luxembourg funds and more than 800 Irish funds registered in countries in the Asia-Pacific region as a whole. Although only one Luxembourg fund is registered in the United States, emphasising that country’s lack of openness, the figure is more than 1,000 in Chile.

Germany is clearly the most open European market. Almost 4,000 Luxembourg funds are distributed there, compared with 2,800 in France. More surprisingly, the second largest market for Luxembourg funds is Austria (3,299) and the third largest market is located outside the European Union, namely Switzerland (3,078).

On the other hand, Germans, traditionally very export-minded, make little use of their local products: there were 507 German funds registered in world financial centres as a whole, versus 1,254 French funds, but above all 44,629 Luxembourg funds, 7,537 Irish funds and even 1,452 British funds.

Some thirty groups distribute their funds in more than 20 countries (chart 2)

In four years, the number of asset managers distributing their UCITS on more than 20 markets, i.e. 33 at the end of 2009, has almost doubled. The vast majority of them are Anglo-Saxons (American or British), followed by French, Swiss and German asset managers in that order.

The number of cross-border funds has doubled in seven years (chart 3)

Cross-border funds (distributed in at least three different countries) totalled 7,441 at the end of 2009, versus 7,366 one year earlier and 3,750 at the end of 2002. On average, a cross-border fund is distributed on eight markets. In total, these UCITS represented a total of 58,553 registrations on all markets (i.e. up by 2% in one year).

Franklin Templeton, the n°1 cross-border funds manager (chart 4)

(by number of distribution countries)

Franklin Templeton distributes its funds in fifty different countries, i.e. eight more than its challenger, namely HSBC, and ten more than the third ranked company, BlackRock. Not surprisingly, the American asset manager relies mainly on a range of Luxembourg funds, which it markets in 48 different countries (several European, American and Asian countries, and even in the Middle East and Africa). Moreover, only three of the twenty leading players have decided to promote above all non-Luxembourg funds, but nevertheless thirteen of the top fifty: the funds involved are mainly registered in Ireland (in 11 cases), but also in Jersey (one case) and the United Kingdom (one case).

Germany, the most attractive market (chart 4)

In Europe, Germany is the favourite market, since 95% of the top hundred world asset managers distribute their cross-border funds there, versus 93% in Switzerland, 90% in France, 85% in both the United Kingdom and the Netherlands, 83% in Austria and 80% in both Italy and Spain.

On the other hand, North America seems far less open: only 8% of the world’s top 100 asset managers market cross-border funds in the United States and the figure is as low as 1% in Canada. Some fund managers are attracted by South American countries, above all Chile (60%) and Peru (39%).

Finally, in Asia, the countries with the highest concentration of leading asset managers distributing foreign funds are Singapore (75%), Hong Kong (47%) and Taiwan (41%).

Luxembourg funds maintain their leadership outside Europe (chart 5)

Nearly 6.500 Luxembourg funds are registered across Asia Pacific, the Middle East, Americas and Africa, while only 1,200 Irish funds have achieved this status. For European funds, the main market outside Europe is the Asian one, more precisely Singapore, the first market outside Europe. More surprising, the second market is Chile, followed by Hong Kong, then Bahrain and Taiwan.

‘‘This year’s edition confirms that, in a world of persistent uncertainty, the cross-border fund industry continues to be remarkably resilient, more cross-border promoters selling more products in more countries. Looking back over the past 10 years, the growth of the cross-border fund industry has been incredible. In 1999, some 2,290 true cross-border funds were sold by approximately 65 fund management groups in a fairly limited number of jurisdictions. Today, 7,500 cross-border funds are sold by more than 220 fund groups all over the world." - Mark Evans, Partner at PwC Luxembourg and leader of the Global Fund Distribution Service

 

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