UCITS IV

The FSA and HM Treasury have issued a joint consultation on the implementation of UCITS IV.

As will be known, there has been an increasing interest in UCITS since ‘the crunch’ with fund management entities such as Jupiter, Sabre and GAM, having launched UCITS funds. The consultation paper contains some interesting data such as at the end of 2009 the AuM of UCITS funds were around €5 trillion(the most recent fact sheet issued by the European Fund and Asset Management Association quotes €5.7 trillion as at last October) and that there is a proliferation of small funds: 65% of all funds manage less than €50m in assets.

The original UCITS Directive came into effect in 1988 in an attempt to harmonise EEA laws governing the operation and regulation of open-ended collectives by, for example, setting borrowing and investment powers with the latter ensuring a spread of risk. We are currently at UCITS III and UCITS IV must be transposed into UK law by 1 July 2011.

UCITS IV introduces a number of changes including (the COLL rules shown below relate to the proposed revised rules – for further details see link to ‘Draft FSA Handbook text’):

Replacing the simplified prospectus (although this will remain for non-UCITS retail schemes – NURS) with a more concise ‘key investor information’ document (COLL 4.7);

Introduction of master-feeder structures (COLL 11);

Simplifying the cross-border marketing of UCITS to provide speedier access (COLL 12.4);

Introduction of a management company passport i.e. the management company does not need to be established in the same state as the fund. (COLL 12.2).

Between them, the UCITS IV Directive and the Alternative Investment Fund Managers Directive (which governs non-UCITS) will capture all collective investment schemes.

The consultation period ends 21 March 2011.

The links will allow you access to the joint consultation document, and proposed changes to the handbook, and to ‘UCITS IV’ (2009/65/EC).

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