Global fund distribution trends: responding to the pension challenge

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Dwight King
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1 Global fund distribution trends: responding to the pension challenge XV International Conference of the Association of Eurasian Central Securities Depositories 29 September 2018 Tashkent

2 Agenda Terminology used in the International Investment Fund Industry International Statistics What s important for you and how can Clearstream help you? 2

3 Terminology used in the International Investment Fund Industry Mutual Fund Passporting Open Architecture Cross-Border Distribution 3

4 The Investment World - Mutual : UCITS, Fund Passporting Source PWC analysis, March

5 The Investment World - The Open Architecture 5

6 The Investment World - Cross-Border Distribution 6

7 Agenda Terminology used in the International Investment Fund Industry International Statistics What s important for you and how can Clearstream help you? 7

8 Top 10 Domiciles of worldwide Investment Fund Assets (Market share at end Q1 2018) 3.7% 3.7% 3.9% 4.4% 4.6% 3.6% 3.5% United States Others Luxembourg Ireland 45.1% Germany 5.5% 9.5% 12.5% France Australia United Kingdom Brazil China Japan Source EFAMA Statistics 8

9 Net Sales of UCITS (EUR billions) Top 5 countries Switzerland Spain Ireland France Luxembourg Q Q2 Q3 Q4 Q Source EFAMA Statistics 9

10 Top 5 cross-border management groups Source PWC analysis, March

11 Top Distribution Markets Europe Asia Pacific Middle East America Africa Germany South Korea United Arab Emirates Curacao South Africa Source PWC analysis, March

Why the Fund Industry Chooses Luxembourg? It has a unique concentration of investment fund experts specialised in all aspects of product development, administration and distribution.

It is a founding member of the European Union and is situated at the heart of Europe, with more than 500 million European consumers on its doorstep.

12 Why the Fund Industry Chooses Luxembourg? It has a unique concentration of investment fund experts specialised in all aspects of product development, administration and distribution. It leads the way in investor protection and has a highly experienced and responsive regulator. It is a founding member of the European Union and is situated at the heart of Europe, with more than 500 million European consumers on its doorstep. Luxembourg s legal and regulatory framework for investment funds is state-of-the-art, and recognised as such by the global asset management community. Luxembourg is endowed with an international and multilingual workforce. English is the language of the financial sector, and French, German and other European languages are also spoken. It has a stable political and social environment and a AAA economy. It has established a competitive framework for UCITS (Undertakings for Collective Investment in Transferable Securities), funds passported within the EU, as well as for non-ucits or alternative investment funds. Its fund lawyers, audit firms and tax advisors are highly experienced in cross-border registrations of both UCITS and non-ucits funds, facilitating fund distribution around the globe. Luxembourg is the largest European fund domicile and the second largest fund centre in the world after the US, with about EUR 3,943 billion in assets under management. Its laws provide for so-called umbrella funds, which have several compartments under a single legal structure, and each compartment can invest in a different asset class. Source ALFI, Global Fund Distribution

13 Agenda Terminology used in the International Investment Fund Industry International Statistics What s important for you and how can Clearstream help you? 13

14 The Traditional Investment Processing Industry (High Level) Investor Distributor 1 U.A.E. TA Luxembourg Fund Family 1 Investor Distributor 2 Luxembourg TA Fund Family 2 Ireland Investor Distributor 3 Hong Kong TA Fund Family 3 Germany* Investor Distributor 4 UK TA Fund Family 4 UK 14

15 Vestima Clearstream Your partner Investment House Broker Distributor Custodian Bank Institutional Investor Pension Fund CSD Vestima CSD CSD TA/Fund TA/Fund TA/Fund TA/Fund Promoter Promoter Promoter Promoter Promoter Promoter 15

16 Clearstream s Investment Services 150,000+ Mutual 50,000+ Alternative 99.7% Settlement Efficiency 100% STP Processes Daily Reconciliation with TAs 37 Fund Jurisdictions Covering All DVP Settlement Centralized Settlement with TAs Full Asset Servicing Order, Cash and Units Reporting EUR 2.2 trillion Fund Assets 18 mil Settlement Transactions Centralized Order Routing, Settlement and Custody One-Stop-Shop Trailer Fee Services 16

17 Fund markets covered 17

18 Complexity Clearstream's Fund Offering - One-Stop Shop for high Alternative Fund Services More complex, less automation Hedge Mutual Fund Services Alternative Investment Complex Mutual Simple Retail Exchange Traded many Manual processes 18

19 Jan Willems Vice President, Market Development Phone: Clearstream Banking S.A. 42, Avenue JF Kennedy L-1855 Luxembourg 19

European Central Bank TARGET 2 SECURITIES - Funds Workshop Luxembourg, April 27th, Cross-Border Funds and T2S. A Luxembourg TA Perspective

European Central Bank TARGET 2 SECURITIES - Funds Workshop Luxembourg, April 27th, 2010 Cross-Border Funds and T2S A Luxembourg TA Perspective 1 Agenda I. Introduction II. The Transfer Agent and Settlement