The European Commission has today launched a consultation on various issues relating to the investment techniques of UCITS.
The consultation also considers the need to create a culture in which retail investors take a longer-term and strategic view when investing in funds, and for UCITS to be able to participate in social businesses.
Commenting on today's consultation, Julie Patterson, IMA Director of Authorised Funds & Tax, said:
"This consultation is timely. It completes the package of current discussions about the evolution of UCITS, Europe's pre-eminent regulated investment product for retail investors.
"As the Commission itself noted in 2009, the existing UCITS regulatory framework has proved very resilient, including in very difficult market conditions such as the recent credit crisis. Moreover, enhanced guidelines on such matters as risk management have already further strengthened the UCITS framework, and the new consumer-tested disclosure document - the ‘KIID' - is now in place.
"The Commission is right to focus on creating a European investment culture where retail investors take a longer-term and strategic view when investing in funds. But it is important that we do not place unnecessary additional restrictions or costs on UCITS to the extent that those with modest amounts to invest cannot achieve their longer-term aspirations in a cost-effective manner. We must avoid investment strategies being inappropriately limited within UCITS but readily accessed via less regulated products. Also, it is essential that existing, well-regulated delegation practices be allowed to continue. The case for alignment of UCITS and AIFMD rules can only be assessed once the AIFMD Level 2 measures are published.
"We also welcome the opportunity to secure a small number of technical changes that IMA has been seeking. These are needed in order for investors to benefit from the operational efficiencies intended by ‘UCITS IV'. In relation to cross border fund mergers, this will also require tax hurdles to be addressed."
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