UCITS share classes

ESMA has identified differing national practices in the interpretation of the types of share classes that are permitted under UCITS and, in the light of this, has published Discussion Paper 2014/1577 – “Share classes of UCITS”.

For the avoidance of doubt a ‘share class’ is not the same as a ‘sub-fund’.  The latter is effectively a compartment of a UCITS which has different characteristics e.g. investment strategy from other sub-funds. One would expect the assets of sub-funds to be segregated so that any liability arising in one of these compartments cannot be offset by the assets of other compartments.  On the other hand a share class is a category of share of the same UCITS e.g. one share class may be denominated in € whilst another may be in £ or they may have different fee structures etc.

The Paper sets out initial thoughts on what could legitimately fall under the heading of ‘share class’ – funds aimed at institutional investors vs. retails investors is one example – and those which do not seem compatible with the concept, say share classes that differ in terms of leverage.

Although the intention is to establish a common position on the use of share classes by UCITS, ESMA will take into account the possible impact on current market practices when developing its final position on the topic.


Comments are invited by 27 March 2015.

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