UCITS IV in short
UCITS IV, the recast of the Directive on undertakings for collective investment in transferable securities, adopted in July 2009 opens new perspectives to the investment fund industry.
Since the adoption of the original UCITS Directive in 1985, the UCITS's brand recognition has evolved into a highly successful benchmark for international excellence generating widespread interest among investors worldwide. Total net assets of UCITS reached EUR 5,157 billion at the end of June 2009, representing 75.4% of the total EU investment fund industry. Focusing on 6 major areas, the enhanced regulatory environment is expected to boost the industry's competitiveness by introducing efficiency and consolidation measures, creating economies of scale and increasing investors' protection.
The UCITS IV package introduces a genuine European passport which allows UCITS management companies authorised in one Member State to manage, administer and market corporate or contractual funds in another Member State. It cuts existing red-tape and administrative barriers to cross-border sales of UCITS are reduced by establishing a streamlined procedure based on electronic regulator-to-regulator communication. In answer to increasing demand for rationalisation from the EU funds market, UCITS IV facilitates (cross-border) mergers of UCITS; and permits asset pooling by creating a framework for "master-feeder" structures whereby a UCITS invests more than 85% of its assets in another UCITS. Finally, UCITS IV improves investor information by creating a standardised summary information document referred to as "key investor information" or "KII" and, by means of enhanced cooperation between national supervisors, it strengthens the supervision of UCITS and of the companies that manage them.
… and Next?
The EU Commission shall adopt level 2 implementing measures clarifying certain provisions of UCITS IV by July 2010. As for Member States, they are expected to transpose the provisions of UCITS IV into national legislations and implement by 1 July 2011, except for those provisions relating to the KII which are to be implemented as soon as possible and by no later than 1 July 2012. From now on, the real challenge for UCITS managers will be to identify the optimal structure offered by UCITS IV which will comply with the investors' expectations.