Research shows success of UCITS outside of Europe - EFAMA

The European Fund and Asset Management Association (EFAMA) has issued research that highlights how UCITS have proven to be one of the EU’s most successful financial exports, with a EUR 6trn global footprint spanning over 50 countries beyond the EU.

In the latest issue of its Market Insights series titled “UCITS, a global success story – The distribution of UCITS outside of Europe”.

This Market Insights leverages Broadridge’s proprietary Global Market Intelligence (GMI) data to map UCITS distribution trends internationally, providing a detailed look and identifying leading regions and countries outside of Europe, EFAMA said. It highlights key trends by fund type as well as patterns driving sales. It also compares ownership of domestic funds with that of cross-border UCITS in various countries across the world. The final section offers several recommendations to ensure the continued global success of European investment funds.

Key findings

• UCITS have proven to be one of the EU’s most successful financial exports, with a genuinely global footprint spanning over 50 countries beyond the EU.

• Net assets of cross-border UCITS have consistently grown year-on-year over the past decade, reaching EUR 6.1 trillion within the EU (+145%) and EUR 5.7 trillion outside the EU (+133%).

• Outside of Europe, the Asia-Pacific region is the largest UCITS owner (8.7% of all cross-border UCITS), with Hong Kong, Singapore and Taiwan as the key markets. Latin America and the Middle East & Africa are substantially smaller, making up 3.3% and 1.2% of the cross-border UCITS market, respectively.

• Regional differences could offer diversification opportunities for European asset managers seeking to broaden distribution strategies globally. For example, multi-asset UCITS — despite falling out of favour recently in Europe — have continued to record modest yet steady inflows in Asia and the Middle East & Africa.

• To safeguard Europe’s position as the global gold standard in investment funds, the EU should:
  • Ensure a stable and supportive regulatory framework that avoids frequent rule changes, which could risk undermining confidence among extra-EU regulators and investors.
  • Consider how the UCITS success can be replicated for Alternative Investment Funds (AIFs), particularly the ELTIF label.
  • Deepen engagement with foreign regulators and industry to explore how financial regulatory dialogues can help strengthen the UCITS and AIF brands.

Afzal Amijee, Product Director, EMEA - Data & Analytics at Broadridge, commented: “Sold in over 50 countries beyond the EU, UCITS has grown into a very successful financial export product, creating a global growth opportunity for European and International asset managers. This research, based on Broadridge’s Global Market Intelligence (GMI) data set, offers some guidance to asset managers on where to focus their international distribution efforts, and which fund types are attracting net inflows.”

Thomas Tilley, Senior Economist at EFAMA, commented: “Despite the significant growth of EU fund distribution internationally, global competition is intensifying. Some countries are enhancing their domestic fund industries and offering regional alternatives to UCITS. UCITS have achieved global success due to their robust and stable regulatory framework, as well as their flexibility in terms of eligible assets. EU policymakers need to prioritise maintaining these qualities to preserve the international competitiveness of UCITS and ensure that they remain the gold standard for investment funds worldwide.”

This article first appeared on II's sister title International Adviser.