UCITS World
The global standard for mutual funds
UCITS have become not just the EU, but the global standard for mutual funds, recognised for the high level of investor protection, regulation and oversight they provide. While UCITS are a retail fund product, they are also favoured by institutional investors who value their regulatory and risk management framework, liquidity and transparency. UCITS can invest in a wide range of eligible assets and combine robust risk management with opportunities to use sophisticated investment strategies in a controlled manner.
UCITS funds hold assets worth almost EUR 6 trillion (EFAMA, Q2 2011) and are distributed in over 70 countries worldwide (IFIA, 2011). Ireland has been synonymous with cross-border UCITS since their inception under the 1985 UCITS Directive.
What is a UCITS?
A UCITS or “Undertaking for Collective Investment in Transferable Securities” is a highly regulated collective investment fund vehicle that can be authorised in one member state of the European Union and ‘passported’ for sale into another EU member state though a simplified notification process. Key features of UCITS include:
- Open to retail investors
- Open-ended
- Eligible assets rules and investment restrictions
- Strict risk management framework
- Independent depositary
- Investor protection and disclosure requirements
- Strict governance rules
- Can be sold throughout the EU under the EU Passport
Why UCITS?
The purpose of UCITS has always been to provide a common European standard for mutual funds to enable cross-border distribution. Therefore by their definition, UCITS provide an ideal solution for international fund promoters. Over the years the UCITS brand has gone from strength to strength and here is why:
- Tried and tested, robust regulatory framework
- High level of acceptance by regulators worldwide
- Global distribution to over 70 countries
- Focus on risk management and investor protection
- Flexibility to accommodate a wide range of investment strategies
- Continuous evolution – UCITS I, UCITS III, UCITS IV and UCITS V
Investment possibilities
UCITS can invest in a wide range of eligible assets (subject to conditions) which include:
- Transferable securities (includes closed-ended funds, structured financial instruments, money market instruments)
- Money market instruments other than those dealt on a regulated market
- Units of another UCITS
- Units of Non-UCITS funds (30% limit)
- Deposits with credit institutions
- Financial derivative instruments
- Index tracking UCITS
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Sophisticated UCITS
Ireland has a long track record in servicing both alternative funds and traditional UCITS and is ideally placed to meet the demands of sophisticated UCITS funds.
Exchange-traded funds: challenging the dominance of mutual funds
In this report we provide an introduction to ETFs, including how they are formed and a comparison between ETFs and mutual funds. We also look at the proposed changes in ETF regulations and what the near future holds for ETFs. Lastly, we answer the question whether ETFs will challenge the dominance of mutual funds in the future.
UCITS IV – the evolution continues
With the introduction of UCITS IV, Ireland is a very attractive location for authorised management companies.
Service providers to an Irish fund
Selecting service providers to an Irish fund forms an integral part of any fund set-up. Service providers typically consist of the investment manager, administrator, transfer agent (‘TA’), custodian and trustee and, in the case of a hedge fund, the prime broker.
Contact us
Deirdre Power
Partner, Investment Management Advisory
T: +353 1 417 2448
Alan Cuddihy
Director, Investment Management Advisory
T: +353 1 417 2444
Or any member of our team