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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


Associations & Corporationsunited to meet future challenges

EFAMA-Land

24 Countries:� 20 EU Members

and� Liechtenstein� Norway� Switzerland� Turkey


� 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


� 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 –


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

Recent trends in the European fund industry(AuM in EUR billion)


Sweden:150

UK: 900

Ireland: 813

Germany: 1,060

Top 10 Fund Domiciles at end June 2007(Total net assets in EUR billions)


France: 1,637

Spain: 292Italy: 365

Austria: 174Luxembourg: 2,047

Switzerland: 155

UCITS asset continue to grow, but …(EUR billions and percentage)


Cross-border distribution gains momentum

72% out of 452 billion EUR


The secret of the UCITS success


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


– 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


Ensuring more effective & more uniform investor protection

� 4 cornerstones

– Comprehensive information to investors


– Comprehensive information to investors– Effective supervision of fund & management company– Meaningful diversification in tradable and liquid

instruments– Separation of management and safekeeping of

assets


� UCITS are harmonised products and can be set up in all EU Member States

� As they are harmonised products and benefit


� 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


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


� 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


� 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


� 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


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


� 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


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


>>> 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


– 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


– 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


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


� Funds of hedge funds

– Distribution to qualified investors

Gary Palmer

Implementation of UCITS III


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


� 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


� Use of Derivatives – Risk Management Process

Implementation of UCITS III and its impact on local distribution

Panel Discussion


Charles Muller

The Global Dimension of UCITS


The Global Dimension of UCITS

Worldwide Investment Fund Assets(market shares in % end 2006 – Europe: only UCITS)


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:


� 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


� Main European hubs for global distribution: Ireland & Luxembourg

� However, UCITS are harmonised products and can be set up in all EU Member States


� 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%


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


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


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


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


UCITS

Regulated in the interest of Investor protection


Regulated in the interest of Investor protection

Q & A


Q & A

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


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

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