Unleash the UCITS dragon

Mon Apr 16, 2012

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Comment by Joy Dunbar, Editor of Absolute UCITS


Like all things associated with China the country's fund management industry is expected to grow exponentially - with some estimates suggesting it could grow to $10 trillion by 2030.

This development has the potential to mutually benefit the established European and the fledgling Chinese fund industries.

The growing middle class, the one child policy and an increasingly aging demographic means that increasingly affluent Chinese investors require solutions to their investment, retirement and insurance needs.

The established fund management industries in developed countries in Europe and the US are being challenged on a number of fronts - more financial regulation and the extended period of deleveraging has resulted in saving ratios falling.

But they have the advantage of having some of the largest established markets with corporate governance and sound fund structures.

These developments have occurred during a time when the Chinese government has indicated that it wants to become a world leader in financial services. It has opened its doors to foreign fund managers, who have bought stakes in local firms, and has started the process of internationalising of its currency.

The UCITS framework has allowed and will continue to enable Chinese managers to launch funds using an established and well regulated structure.

Chinese asset managers benefit European investors who have access to an emerging market strategy via the global distribution benefits of the wrapper. Also the European asset management industry benefits through the administrative services it provides.

The framework has become a global brand and European regulators, as well as the European fund management industry, need to respond to the challenge by retaining the reputation of the UCITS brand.

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ISSN: 2151-1845 / CDC10004H