According to an Ernst & Young survey, in a poll of 98 European investment fund participants, 49% said that business model alignment with UCITS IV is the biggest driver for improving their operating model. However, just 37% identified UCITS IV as cost efficiency.
According to the survey, the new UCITS IV Directive is not bringing the operational cost reductions many European investment fund asset managers assumed, but they are still finding benefits around business model alignment.
In a poll of 98 European investment fund participants, 49 per cent said that business model alignment with UCITS IV is the biggest driver for improving their operating model. This compared to 37 per cent that identified cost efficiency.
Crispin Rolt, Ernst & Young’s UCITS IV leader, said: “Many fund managers assumed that UCITS IV would offer significant opportunity to reduce operational cost. However, as asset managers look at UCITS IV in more detail, in many cases they realise that the cost reduction opportunity is of a smaller magnitude than initially expected. The focus has turned to using UCITS IV to optimise the operating model and fund ranges, to align better with the business strategy of the organisation. The investor will still benefit and by pooling funds it is anticipated that there will be opportunity to reduce some of the expense borne by the fund.”
The realization that cost reduction will not be the biggest driver for UCITS IV was also seen in managers’ responses to what drove their decision to optimise their fund range: 43 per cent identified operational efficiency as their top driver, compared with 29 per cent that said cost reduction and 28 per cent that identified distribution benefits.
With 18 months before the July 2011 implementation deadline, a fifth of the funds polled have not started work relating to the new UCITS IV. Less than a third have already started work on the path to implementation either by appointing a steering committee or conducting high level analysis.
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