What will be the European fund industry like a few years from now? Size, distribution and cost efficiency have become more than ever central issues two years after Lehman.

 Covering ten countries with the voice of half of the industry, this study answers strategic questions: what will be the impacts of the UCITS IV Directive? what are the strategies adopted by the industry leaders? where do the major opportunities lie?

The results, as it appears, are quite challenging:

• UCITS IV may be missing its initial goal of improving yields and ensuring more efficiency.
• Large parts of the text may well remain unuseful in the absence of clarity on tax issues. As a consequence, most asset managers remain in a wait-and-see stance.
• Still, it improves the present. The Directive goes one step beyond in the process of an integrated pan-European market, and may help industry players in their strategic moves.
• Depository banks and fund administrators have proven proactive in the process, most of them being actively preparing new service packages.
• Strong commercial efforts will be required to get a bigger share of European fund markets. They remain hard to penetrate, only Italy and Central Europe showing significant potentials for growth.
• Countries with a strong local industry and know-how, such as France, UK, or even Germany, should in effect be favored, together with Luxembourg as a distribution facility.

 This is no revolution. In fact, the financial crisis may well have a bigger impact on the structure of the industry. But that goes in the right direction. What will be the next steps? Tax issues, and asset protection should be the next big things in a “UCITS V” regulation. Industry players long for it.