When in September of last year the government decided to abolish the financial loophole that would allow SICAVs (open-ended collective investment schemes common in Western Europe and similar to open-ended mutual fund in the United States) to reduce their capital levels without having to submit accounting reports to the Treasury, few who paid attention to the fleeing capital and less demand from investors looking to channel their savings.
Still, it looks like nobody will make any formal complaints. And in fact, quite the opposite. According to data from the CNMV, in Q1 of this year, 33 new investment groups were registered. 19 were registered in Q1 of 2010, which equals a 73% growth this year. Further, this figure made Q1 the most active since Q2 of 2008.
But this boom in the growth of SICAVs is not the only thing that suggests that major investors will continue preferring these investment vehicles. Their net assets level also supports this view. According to data from Inverco, at the end of 2010, active SICAV shares under management rose more than 25 billion euros. These net assets have risen to nearly 27 billion euros, an increase of 5.7%. The number of shares distributed among investors rose from 386,329 at the end of last year to 426,070 at the end of June.
Why is this happening to SICAVs?
Major investors prefer SICAVs for several reasons. On the one hand, the government?s policy changes from nearly a year ago have allowed for a major competitive advantage: the vehicles will continue paying a nominal 1% tax on investments. Above all, people are waiting to see if this tax will last over a long period of time. "An increase in the SICAV tax is being talked about, but the fact is there haven?t been any changes yet and it?s very likely that it will be dissolved before the new government comes in," affirmed Ricardo Sánchez Seco, a fund analyst from Gestiohna. In fact, the Partido Popular, which surveys say will win the next election, approved the low SICAV tax in 2003.
