Undertakings Collective Investment in Transferable Securities (UCITS)

Money investor

The UCITS is a regulatory framework of the European Commission. It is a regulatory body that manages mutual funds and their sale. UCITS funds are registered in Europe and their buyers can be the investors from all over the world. It uses unified investor protection and regulatory requirements. In individual European countries, UCITS fund providers meeting the required standards are exempt from the national regulations.

If we discuss everyday usage, a UCITS refers to a European Union based mutual fund. These funds have a perception of being well-regulated and safe investments. They are extremely popular in Europe, Asia and South America, among the investors who do not prefer investing in a single company. Rather, they diversify their unit trust and the same are spread out within the European Union.

History of UCITS

On December 20, 1985, the fist UCITS Directive was adopted. The aim was stated as facilitating cross-border offerings in terms of investment funds, to the retail investors. Early 1990s saw attempts and proposals for the modification of the directive. These were never fully adopted, though. So, there never come up a UCITS II. However, it was in the year 2002 that there were discussions with other member countries. Post these discussions two new directives, the 2001/107/EC and the 2001/108/EC were adopted. These are together known as the UCITS III. They broadened the spectrum of investment for the UCITS funds and relaxed some earlier implied restrictions for the index funds.

The Directive 2009/65/EC, also known as the UCITS IV was brought about after some technical changes were suggested and adopted during the month of July 2011. Finally, the Directive 2014/91/EU or the UCITS V was adopted. It came into force in the month of March 2016. It aligned the remuneration requirements of the fund managers, and the duties and responsibilities of the fund depositories to those of the AIFMD (Alternative Investment Fund Managers Directive).

UCITS funds are extremely popular investments. This is because they are seen as well regulated and safe. According to the statistics provided by the European Commission, these funds account for 75% of the collective investments made by the comparatively smaller investors in Europe. There are numerous mutual fund providers who use the phrase ‘UCITS compliant’ to boost their marketing strategy. This builds trust among the investors. Buyers throughout the world have the luxury to invest in these funds, even though they are regulated in Europe.

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