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CHANGE IN THE AIR The ALFI Spring Conference will be abuzz with talk of UCITS IV. What other challenges will dominate conversation at the fund industry event? Text: Aaron Grunwald — Photos: Etienne Delorme/archives
One of the world’s premier asset management confabs will mark its twelfth anniversary this month here in the Grand Duchy. The Association of the Luxembourg Fund Industry (ALFI)’s 2011 Spring Conference is known as a key place to keep tabs on industry developments. While the rollout of Europe’s next generation of mutual funds will undoubtedly be a major subject, Delano asked four international participants to preview the event’s other hot topics. Packaged Retail Investment Products (PRIPs) provide returns that vary based on fluctuating factors in the marketplace, the most common of which in Europe are UCITS funds. However, there is a stark contrast in how PRIPs are regulated in the UK and the rest of Europe, says David Rouch, partner at the law firm Freshfields Bruckhaus Deringer in London. At the conference, he is moderating a discussion between two regulators, one from the UK’s Financial Services Authority and one from the European Commission side. Rouch says there is a fundamental question of whether Europe’s Key Investor Information Document (KIID)--the new standardised, short disclosure brochures that funds must provide to indi-
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ALFI Spring Conference: attracts top fund industry players from around the globe
vidual investors starting this July--can meaningfully describe an investment’s risk and volatility in two to four pages. “The reality is that for some of these products, that’s just not enough. There’s a great concern in the industry that it opens them up to liability if it manifestly doesn’t tell you everything you need to know.” Commission Ban In a separate move, the FSA banned all commission payments from PRIP
providers from 2013. Rouch explains: “This is pretty radical stuff. You are basically rewriting the economics of the entire market,” as it breaks the financial link between funds, and the banks and investment advisors who actually sell investments to consumers. “There is a question if the same change should be made in the European market.” For his part, Guillaume Prache, managing director of EuroInvestors, the Brussels-based financial consumers