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UCITS celebrates it's 25th birthday


Date: Wednesday, December 29, 2010
Author: Hedgeweek

Twenty five years ago this week saw the first formal adoption of the UCITS directive, since when it has gone through two further incarnations, with a third, UCITS IV, due next July. Leading the way in embracing UCITS has been Luxembourg, whose government became the first EU country to ratify the UCITS IV bill on 16th December 2010 after the draft bill (No 6170) was first presented to its parliament on 6th August 2010. How symbolic then, that Luxembourg was also the first EU country to approve UCITS back in 1985. Since that time, UCITS has grown in stature across the EU to become the ‘gold standard’ in investment funds, its increasing adoption across Latin America, the Middle East and Asia merely serving to emphasize its recognition as a global brand. The high degree of regulation, transparency and liquidity that forms the backbone to the UCITS structure has become increasingly important post ’08 amongst investors both retail and institutional.

So much so, that some commentators are calling for Asia to use UCITS as the template for creating its own region-wide uniform fund structure through an Asian Fund Passport. Indeed, New Zealand has already set out its stall to adopt UCITS as it seeks to establish a new fund regime by next financial year. Commenting on UCITS’ 25th-year anniversary, Claude Kremer (pictured), Chairman of the Association of the Luxembourg Fund Industry (ALFI), said that today UCITS stood for “safety, transparency and cost-efficiency”, adding that it was a success story for the European Union and asset managers “based all over Europe and beyond”. “We are confident that with the support of all players, UCITS products will continue to expand their global reach,” said Kremer. One of the key successes of UCITS has been the ability to passport funds, meaning that once registered in an EU member state a fund can be marketed and sold freely across all other member states. Speaking on the passporting issue in light of the AIFM Directive, ALFI Director General, Camille Thommes said: “We are working to get it right, but believe it will be possible to replicate the success of UCITS when the AIFM Directive comes into effect.”