The Fund Industry: How Your Money is Managed, 2nd Edition

CHAPTER 18

Cross-Border Asset Gathering

The relaxation of controls on cross-border financial flows has made more than investing overseas easier—it has made doing business globally easier as well. As the world economy has become increasingly integrated, more and more companies are reaching beyond their home base in search of growth in other countries. They're looking to increase revenues and profits by selling into a larger market.

Mutual fund management companies are part of this globalization trend, creating new funds and setting up operations around the world. The math is compelling. The United States is the largest mutual fund market—yet it accounts for only half of worldwide assets—meaning that firms establishing themselves overseas can, at a minimum, double the size of their target market.¹ And there's a good chance that those overseas markets are growing at a faster pace than the fund business is at home.

In this chapter, we look at mutual fund management companies as businesses trying to expand internationally. We explain the models that fund sponsors have used to build a presence in other countries. We then take a look at how those models have been used in Europe to develop a successful structure for cross-border asset gathering.

This chapter reviews:

• The past growth and future potential of the worldwide market for investment funds.
• The possible models for building a global fund business.
• The success of the European UCITS cross-border model and its extension to hedge funds ...