US fund groups looking to compete in the global marketplace cannot easily export mutual funds to overseas markets. They are more likely to set up Ucits (Undertakings in collective investments in transferable securities) as this European brand of fund is recognised and trusted from Chile to Hong Kong.

But with fund flows in Asia predicted to reach $1,000bn (£502bn, €676bn) in the next five years, agitation has begun for a US-based mutual fund that could compete more effectively on the international stage. The Investment Company Institute , a trade association and lobby group that represents the $1,000bn US mutual fund industry, recommended recently that the Department of Treasury encourage Congress to legislate for a US-based investment vehicle that could attract foreign investment with more favourable tax treatment.

The drumbeat for a global product is in its early stages but the ICI's recommendation comes after a record year for flows in Asia. Last year $450bn poured into Asian mutual funds - more than the US and Europe combined, consulting firm Strategic Insight reports. Its findings show flows will eclipse $800bn in the next three years, possibly reaching $1,000bn by 2013.

To tap into this growth, many firms have changed strategies and launched funds outside the US to establish track records to make their funds more identifiable to distributors. Large fund firms, such as Fidelity, Franklin Templeton and the Capital Group, long ago took an international approach to gathering assets. Smaller boutique US players are turning to the Ucits brand to launch funds because of its wide acceptance.

"Clearly you have this explosive acceleration of demand, and what we've seen in the last few weeks will slow it down but strategically the demand for investment management in Asia is insatiable and unstoppable," says Avi Nachmany, director of research at Strategic Insight. "And from a strategic development standpoint, you have to have a Ucits."

All managers must contend with differing regional regulations and tweak products accordingly. But US money managers are at a disadvantage because of higher cost to enter the global market and inefficiencies in cloning their US funds.

US mutual funds are regulated under the Investment Company Act of 1940 and do not have a comparable vehicle to Ucits to export, largely because of tax penalties foreign investors incur when investing in US-based funds.

The ICI has long lobbied for tax reforms that would make US funds more attractive but the overall result would be less immediate tax revenues, apparently making it far from appealing to legislators. The ICI has since stepped up its calls for an alternative product, though some say reforming the entire industry is not necessary and changes to tax laws could get the same results.

The gradual unseating of the US as the dominant player in the world's financial markets has led many to push for legislative changes that would make it easier for the US to compete globally.

The need for a more global vehicle may have taken some by surprise. Non-US fund flows were minuscule up until a few years ago, notes Strategic Insight's Daniel Enskat, managing director of global research. By the time growth in Asia and Europe compared with the US, the Ucits structure had been around for many years, he says.

Steve Bartlett, president and chief executive of the Financial Services Roundtable , a lobby group for large financial services firms calling for overall regulatory regime changes, says the reason the US is just starting to focus in earnest on this issue is due to old-fashioned US arrogance. "We're the United States and we've always been bigger than everybody else, and now we're not," says Mr Bartlett.

ICI figures show global fund assets eclipsed $24,000bn in June 2007. But the share occupied by US mutual funds has shown a steady slide, slipping from 66 per cent in early 1999 to 47 per cent in mid-2007.

Many groups have joined calls for broad changes to financial regulation, saying litigation and overzealous regulation have stymied overall growth. But investor advocates caution that the deep liquid markets in the US are due in large part to strong investor protections, such as independent boards of directors, that should not be overlooked. There are concerns these would be removed under a new fund structure.

The ICI does not advocate for or against the elimination of fund boards but does argue that the structure of funds in the US is an impediment to marketing products globally. Others suggest the success of the US fund industry and the comparative low cost of US registered funds is a result of the existing regulatory structure, including oversight of independent fund directors.

Mr Bartlett says his group has met with members of Congress in finance and banking committees, some of whom have voiced support for proposing legislation for some of the principles developed by the Financial Services Roundtable. These include moving toward principles-based regulation and a "prudential model of supervision", which they say would result in more co-operative engagement between financial services firms and regulators. The Treasury is engaged in a review of US financial structures and is expected to release its findings in the first quarter of this year.

Amanda Gerut is associate editor on BoardIQ, a Money Media publication