02115 Ucits Iv Fund Range Rationalisation

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This is the first edition of a new report which we have produced which looks at the global distribution of Irish UCITS funds. Irish UCITS funds are distributed successfully on a global basis.

Transcript of 02115 Ucits Iv Fund Range Rationalisation

  • 1. Assurance Asset Management UCITS IV Fund Range Rationalisation PwC contacts: Ken Owens Tel: +353 1 792 8542 Email: ken.owens@ie.pwc.com Andy OCallaghan Tel: +353 1 792 6247 Email: andy.ocallaghan@ie.pwc.com Pat Convery Tel: +353 1 792 8687 Email: pat.convery@ie.pwc.com Re-structuring strategies rationalisation on a cross border and potential for cost savings basis. UCITS IV brings forward the from fund rationalisation opportunity for Asset Managers to streamline and optimize their opportunities within UCITS product range to benet from IV greater economies of scale and potential tax savings post re- A key component to UCITS IV is structuring. the facilitation of Fund Mergers and Master Feeder Structures within European funds tend to be small the UCITS regime, a welcome when compared with US funds. development with the potential Like many of the other UCITS IV for cost savings and added proposals, it is hoped that allowing efciencies to the UCITS brand. Fund Mergers and Master Feeder While Fund Mergers were previously Structures will promote economies allowed at national level, the new of scale and greater efciencies. UCITS IV regime provides for fund First for business. First for people.
  • 2. UCITS IV Fund Range Rationalisation Investment managers Why consider Fund Mergers? Consideration of investment performance of merging UCITS The recent market turmoil and need to control short- conditions have highlighted the Marketability and product history term prot margin many challenges faced by the (sales success to date) industry in terms of signicant pressures while decreases in assets under Fund size & viability of merged preparing for future management and declining prot UCITS margins. Investment managers growth. need to control short-term prot Location Preference: margin pressures while preparing What is the preferred location for the for future growth. In that context, merging UCITS? UCITS IV offers the opportunity for streamlining your Product Portfolio Key considerations:- with the introduction of cross border Fund Mergers. Fiscal & Taxation considerations; Regardless of the legal form and Knowledge of & familiarity of local wherever the location within the EU, legal frameworks; UCITS funds should be permitted Regulatory reputation & to merge. Although subject to responsiveness; certain pre-conditions including prior authorisation by the competent Locations of Products & current authorities of the merging UCITS infrastructure; and and dened measures to ensure Inward marketing & registration investor protection, each member costs. state must provide for domestic and cross border mergers under national Fund Mergers:-The Outcome law. Fund Rationalisation & streamlining of Product Portfolio; Key criteria when considering Amalgamation of smaller AUM cross border and domestic funds, increased economies of mergers:- scale & competitiveness with Investor Implications: How is this international markets; likely to impact the tax position Larger AUM funds with strong of current investors? Can the tax track records optimising market implications of the Rationalisation share; and be managed in an efcient way? Potentially lower TERs for Product Portfolio:-Is there investors and opportunity for alignment of investment strategy reduced operating costs leading and a strategic t of product to increased prot margins. between the proposed merging funds?
  • 3. UCITS IV Fund Range Rationalisation Key challenges for Fund The drawing up of common draft jurisdictions at national level, the Mergers terms of the potential merger and proposals under the UCITS IV create merger rationale to the investors further opportunities for greater While the introduction of cross of both the merging and receiving economies of scale and the potential border fund mergers is a welcome UCITS and impact assessment of reduction of TERs through the development, certain factors have the proposed merger; facilitation of cross border Master been identied that may prove Feeder structures and enabling one The valuation of assets and challenging during the merger or more feeder funds to pool their determination of the calculation process:- assets in a single master fund. method of the exchange ratio; and Tax implications evaluating the tax implications of fund mergers Avoiding an excessive outow of Key requirements for Master for the underlying investor and AUM for the merging fund at the Feeder Structures within the management company may point of merger. UCITS:- prove challenging while there The Master and each of are different taxes regimes in the Master Feeder Structures:- the Feeders must each be respective countries of residence UCITS IV proposals also provide established as a UCITS fund; and until such time as the merging of UCITS is recognised for asset pooling measures through Each Feeder Fund is required to as a tax neutral event; the facilitation of Master Feeder invest at least 85% of their assets structures. While Master Feeder into the Master Fund, with a structures already exist in some maximum of 15% of their assets
  • 4. UCITS IV Fund Range Rationalisation held in ancillary liquid assets, If the Master Fund and the Key Challenges for Master nancial derivative instruments Feeder Fund are established in Feeder Structures or in the case of investment different; jurisdictions, the Master