The European Commission has announced plans to improve the framework for UCITS funds, paving the way for the introduction of UCITS IV.

UCITS (Undertakings for Collective Investment in Transferable Securities) were established in 1985. Once registered in one EU country, a UCITS fund can be freely marketed across the EU.

The UCITS IV framework promises to generate a greater choice of investment funds operating at lower costs and improve investor protection by making sure that they receive clear, easily understandable and relevant information.

The EC’s International Market and Services coordinator, Charlie McCreevy, says, ‘During the past few years, we have carefully identified the areas where improvement in existing provisions needed to be introduced. The legislative package should ensure that the UCITS rulebook continues to be a success story in Europe and also in other parts of the world, like Asia or Latin America, where the brand is widely sold and highly valued.’

The Investment Management Association (IMA) has welcomed the proposals and hopes that they can be implemented without delay to allow investors to benefit from an efficient, single European market.

Jarkko Syyrila, director of international relations at the IMA, says, ‘UCITS has been a great European success story for investors, and with increasing global competition these improvements are welcome. The provisions to improve investor protection and reduce costs and bureaucracy will benefit the industry and investors alike.

‘We now call on the European institutions to work together to ensure that all these crucial improvements to the UCITS framework can be adopted by the 2009 European elections.’

At the end of last year, UCITS accounted for over €6.4 trillion of assets in total.