New streamlined and nationally harmonised regulation and a large pool of potential investors make Canada an attractive distribution market for UCITS (Undertakings for Collective Investment in Transferable Securities) funds, according to a new report by RBC Investor & Treasury Services and Borden Ladner Gervais LLP (BLG) entitled UCITS in Canada: Driving business growth through cross-border fund distribution.
Canada has recently implemented a new streamlined and nationally harmonised registration system that facilitates the distribution of UCITS funds to qualified investors in the country. Exemptions from Canadian registration requirements which recognize and rely on the regulation in home markets are now available to Global Asset Managers when distributing UCITS funds to qualified investors - high net worth (HNW) and institutional investors according to the report. Distributions of UCITS funds can be done using European or other disclosure documents, with Canadian wrappers. The Canadian investment market represents a significant pool of potential investors for UCITS funds. The country's pension industry, fifth largest in the world1, is showing an increasing appetite for global assets, the report identifies. Canada also has the world's eighth largest population of HNW investors2 and the eighth largest mutual fund market3.
UCITS products have continued to extend their international reach in recent years, the report explains, as fund managers expand into new markets. As of June 30, 2014, net assets of UCITS funds worldwide totalled $10.2 trillion4, with approximately 48% of that amount domiciled and administered in Luxembourg and Ireland, the two largest UCITS fund markets by net assets. RBC Investor & Treasury Services has considerable experience and expertise in the two offshore fund centres of Luxembourg and Ireland, administering UCITS funds since they were first introduced more than 25 years ago.
"European and North American fund managers are increasingly looking to broaden and diversify their distribution strategies internationally," said Sébastien Danloy, Managing Director, Continental Europe & Offshore, RBC Investor & Treasury Services. "The overall cachet of the UCITS brand, along with a large Canadian investor base, and harmonization of the regulatory environment make Canada an attractive UCITS distribution market for international fund houses."
"Canada's securities regulatory framework gives global players the opportunity to enter Canada and distribute UCITS funds – a brand of investment fund that is well understood in Canada – to qualified investors. This creates significant opportunities for international fund managers and allows greater investment choices for Canadian HNW and institutional investors," said Alfred Page, partner and national practice leader, Securities, Capital Markets and Public Companies, BLG LLP. "The UCITS in Canada report is one of the first comprehensive guides to the Canadian framework uniquely tailored to offering UCITS funds in Canada."
BLG's professionals have expertise and long experience in helping investment management firms to understand and comply with the regulatory requirements and identify the opportunities that exist in Canada.
Footnotes
1. Towers Watson Global Pension Assets Study, February 2013
2. World Wealth Report, RBC Wealth Management and Capgemini, June 2014
3. 2014 Investment Company Fact Book, Investment Company Institute, as at December 31, 2013
4. Quarterly Statistical Release, European Fund and Asset Management Association, as at June 30, 2014
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