UCITS funds

The depositary banking passport, as mooted under UCITS VI, would bring about greater competition, facilitating cost savings for the buy side and could have far reaching consequences for depositary banking centres such as Luxembourg and Ireland.

A source close to the Central Bank of Ireland, the Irish regulator, has said fund passporting schemes in Asia could facilitate reduced access for UCITS managers to investors in the region.

Whilst there have been many changes to the fund industry and fund regulation in Europe, not least with the 22 July entry into force of AIFMD (the Alternative Investment Fund Managers Directive) and all that it entails for fund managers marketing into Europe with the necessary appointment of a depositary bank, there are also changes afoot in the Asian fund regulation landscape that will have far reaching consequences. Indeed, the passporting regimes in Asia will be important to the European fund industry as it looks to market into the region.

“The fund industry is a big success story in Luxembourg and who wants to end a success story?” began H.E. Pierre Gramegna, Luxembourg’s finance minister, in his address at the recent ALFI Global Distribution Conference in Luxembourg. Indeed, the fund industry has expanded out in the country with the arrival of AIFMD. The number of UCITS funds domiciled in Luxembourg was a good starting point for the nation as a fund centre; with many opting to extend their operations into the AIFMD remit.

Luxembourg has established itself as the most popular place for UCITS funds to domicile themselves and is shaping up to take a similar share of the AIFMD market as assets under management in the country ticked over to EUR2.6 trillion in 2013.

“Europe is back on the radar for US and Asian investors,” declared H.E. Pierre Gramegna, Luxembourg’s minister of finance at the London leg of the Association of the Luxembourg Fund Industry’s (ALFI) 2014 road-show. “This is good news for Luxembourg and European funds,” he declared.