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Press Release

Embargoed until 00:01 Monday 25 July 2005


IMA has today launched its report 'Pooling - how can fund managers respond efficiently to different investor needs?' The second IMA report into barriers to European cross-border business¹, the paper identifies the obstacles to allowing managers of funds to offer local funds, but run them as if they were one.  The report identifies economies of scale and provides recommendations as to how pooling can be achieved in the European single market.
In aggregating the assets of investment funds and pension funds, managers can reduce costs in a number of ways, including:

  • Custody  - larger pools will be able to negotiate lower custody fees;
  • Brokerage - larger transactions will lead to lower unit costs;
  • Netting transactions - with more sources coming into the pool the ability to net flows and reduce transaction costs will increase; and
  • Administration costs - which are normally transaction based and will therefore be lower in basis point terms if the pool of assets is larger.

There are also a number of qualitative benefits including, for example, better operational control by facilitating a consistent investment approach and more flexible product design.
While pooling techniques are already used in a number of Member States at a domestic level, different tax and regulatory regimes operate in the EU which make it difficult to pool cross-border. In order for pooling to work across all Member States the paper suggests:

  • The Committee of European Securities Regulators (CESR) should host a discussion amongst Member States' regulators in order to familiarise them with pooling techniques, to explain the practices involved and to share best practice;
  • The European Commission should expedite the work on pooling announced in its Green Paper on enhancing the EU framework for investment funds² with a view to amending the investment and borrowing powers and custodial provisions of the UCITS Directive in order to permit cross-border pooling among all Member States;
  • Work started within the Organisation for Economic Co-operation and Development (OECD) should continue to develop a common framework to ensure tax neutrality of pooling techniques, thus ensuring investors in pooled funds are not penalised.

Sheila Nicoll, Deputy Chief Executive, IMA commented:
"IMA has been stressing for some time the need to facilitate pooling techniques around Europe, for both pension funds and investment funds.  We are pleased that the EU Commission has recognised in its recent Green Paper that pooling could help develop a most cost-efficient industry and that it proposes to undertake further work in this area.  We believe our report provides evidence of the importance of moving forward as quickly as possible in this area."  

A copy of 'Pooling - how can fund managers respond efficiently to different investor needs?' is attached.


For further information, please contact:
Helen Stephenson, Communications Officer, IMA, 020 7831 0898
Out of hours contact:
Despina Constantinides, Partner, Polhill Communications  07801 337 677
Notes to editors:

1.  The findings of IMA's report "Towards a Single European Market" in 2003 identified three main barriers to cross-border business - pooling, registration and mergers. IMA has been working to issue detailed reports and recommendations on each of these barriers. IMA's registration report, produced in conjunction with the European Funds and Asset Management Association (EFAMA) was issued in June 2005.

2.  On 14 July 2005 the Commission published a Green Paper on the Enhancement of the EU Framework for Investment Funds.

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