PARIS -- A bill that will introduce the "sophisticated investor" concept into French investment fund regulation is expected to be presented to the Parliament in March, according to the French investment fund association.
The bill, supported by Paris-based Association Francaise de Gestion-Association Francaise des Fonds d'Investissement, is still being drafted by the treasury and Finance Ministry.
Details are elusive, but treasury sources were able to indicate the bill would follow the lines of similar American and British legislation. It is expected to allow broader disclosure requirements to the "investisseur averti" (sophisticated investor), to create umbrella funds in some form, and to allow French collective investment trusts (known as organismes de placement collectif en valeurs mobilieres or OPCVMs) to use agents that will be able to market funds to the sophisticated investors.
The bill is expected to offer sophisticated investors a wider range of products than are now allowed in France.
The move could be particularly important to the French institutional market, which often prefers pooled vehicles to segregated accounts because no legal entity stands beyond the latter.
Also under consideration is the possibility of allowing the money manager to invest more than 10% of assets in a single security or securities of a single issuer.
This 10% rule creates problems for index funds in certain countries, where a single issue could easily comprise more than one-tenth of the portfolio, said Jean Echiffre, marketing director of State Street Banque S.A., Paris.
Also, inclusion of a "master-feeder" option would aid managers. The provision enables managers to pool assets within a single product even though if may contain funds with different types of investments, fee schedules or valuation dates.
There will be separate definitions of "sophisticated" for a pension or pooled fund and private investors. The sophisticated investor will have to meet minimum investment requirements; the exact amount is under discussion.
Concomitant to the creation of the sophisticated investor status, it is expected funds will be permitted to use placing agents in marketing to these new investors, treasury sources say. The role they will be able to play in broadening fund marketing is not yet clear.