On the edge
One year after UCIT IV implementation, professionals are unanimous in acknowledging its impact on the UCITs market in Europe. The directive helped improve its functioning by allowing asset management companies to export more easily their products, mainly thanks to the master-feeder structure, while insuring investors’ protection via the KIID.
But let’s not get too carried away. If the European passport for funds is well received, it does not operate fully yet, in part because of regulatory disagreements. On the other hand, the passport for management companies has not been tested yet, even if there are ongoing projects. Some even contests its purpose, given that a good number of big companies are already established in the countries they deem necessary for their business. There is still some work to be done to raise regulatory hurdles… before the next directive, since UCIT V is already in the making. And it is not the only concern for the industry. The regulatory environment does not allow for a reprieve: if the debate on ETF is appeased by and large, AIFM, MIF II Emir, Solvency II, Prips and Fatca keep the industry under pressure. A pressure compounded by a context of sovereign debt crisis, low interest rates, anticipation of a recession, bear markets, low appetite for risky assets by investors and strong competition from banks products. One thing is clear: managers are on the edge.