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Brussels, 16 November 2006

Financial services: Commission sets out vision for modernising EU investment fund market

The European Commission has set out its vision for the modernisation of the EU framework for investment funds, which provide consumers with access to professionally managed investments on affordable terms and now account for over €5500 billion of assets. The improvements, which are put forward in a White Paper, will simplify the current Directive on investment funds in order to ensure that investors receive useful cost and performance disclosures when selecting funds, and to make it easier for the industry to achieve cost savings and specialisation benefits across the single market. Following further studies on cost-effectiveness and investor protection, the Commission plans to propose these changes in autumn 2007, in the form of amendments to the current Directive. Meanwhile the Commission will also look at whether there is a need to make similar changes for other fund products, especially real estate funds, that are not covered by the current EU framework.

Internal Market and Services Commissioner Charlie McCreevy said: "The growth of the European investment fund industry has been spectacular. But it still has massive untapped potential. These changes will unlock this potential by creating a barrier-free market for investment funds in the EU - meaning more choice and lower costs for investors."

About the White Paper

The White Paper proposes targeted changes to the current EU framework for investment funds (the 'UCITS Directive'[1]), which does not adequately reflect the challenges facing the industry today and can give rise to unnecessarily high compliance costs and missed investment opportunities. The changes would: simplify the notification procedure; create a framework for the cross-border merger of funds; create a framework for asset pooling; enable fund managers to manage funds domiciled in other Member States; improve the quality and relevance of the key disclosure documents to the end investor; and strengthen supervisory cooperation to monitor and reduce risk of cross-border investor abuse. The White Paper also proposes to review options for establishing a European 'private placement regime', allowing financial institutions to offer investment opportunities to qualified investors across the EU.

The Commission has developed the White Paper on the basis of extensive consultation and debate with consumers, industry practitioners and policymakers over a period of two years. It builds on responses to the Green Paper of July 2005 (IP/06/152), and on three reports from specially constituted expert groups (IP/06/915).

It also responds directly to the important concerns raised in the March 2006 report of the European Parliament on asset management. The steps proposed in this White Paper have been the object of rigorous impact assessment.


Assets under management by the EU industry have grown four-fold over the last decade. The importance of investment funds is set to grow as many European investors use them as a means to save for a prosperous retirement. The market is increasingly organised on a pan-European basis. Cross-border fund sales represented some 66% of the total net industry inflows in 2005. The 'UCITS' model is considered as a 'gold standard' both inside and outside the EU. With €5500 billion under management – equivalent to more than 50% of the EU gross domestic product – 'UCITS' represent 75% of the investment funds market in Europe.
The White Paper is available at:

[1] Undertakings for Collective Investment in Transferable Securities

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