Assets invested in European mutual funds hit a record high this year, pushing past the €10 trillion mark.
Ucits, which stands for “undertakings for the collective investment in transferable securities”, provides a single European regulatory framework for an investment vehicle. This means that a fund can be domiciled in one country but sold across the bloc and is seen as an international gold standard of fund regulation.
Net assets of Ucits funds came in at just over €10 trillion at the end of the first quarter, according to data from the European Fund and Asset Management Association, which collected figures from 29 countries. Quarter on quarter, this was a 7.8 per cent increase.
Ucits have come under fresh scrutiny, however, after the crisis involving Neil Woodford’s flagship equity fund, with £3.7 billion of investor money frozen on June 3rd.
Andrew Bailey, chief executive of the Financial Conduct Authority, said the meltdown was fuelled by "flawed" EU rules that may need to be jettisoned after Brexit.
Supervisory failures
He denied the episode stemmed from supervisory failures and said Mr Woodford’s Equity Income Fund was using “to the full” an “excessively rules-based” EU regime that caps at 10 per cent the proportion of unlisted assets a fund can hold.
The former star stockpicker’s fund had listed on Guernsey’s stock exchange previously unlisted assets in an attempt to keep within Ucits rules. Mr Bailey indicated the bloc’s rules could be reviewed after Brexit when he gave evidence to a parliamentary committee.
Ireland and Luxembourg are among the biggest fund domiciles in Europe, together accounting for 56 per cent of assets invested in Ucits funds.
Assets domiciled in Dublin grew 8.9 per cent in the three months to March while Luxembourg and Britain each recorded asset growth of 7.5 per cent in the same period.– Copyright The Financial Times Limited 2019
