Definition of UCITS
Ucits stands for Undertakings for Collective Investments in Transferable Securities. Ucits provides a single European regulatory framework for an investment vehicle which means it is possible to market the vehicle across the EU without worrying which country it is domiciled in.
Designed to enhance the single market while maintaining high levels of investor protection, Ucits funds have also become successful in Asia and Latin America because the Ucits 'label' means investors can have some assurance that certain regulatory and investor protection requirements have been met.
The creation of the Ucits system also brought costs down for fund providers because it means they no longer had to create a new investment vehicle for each country in which they intended to market the product.
Ucits in the news
In September 2013, it was reported that talks on Ucits V, which would contain the latest EU mutual fund market reforms, had hit a stumbling block. Originally intended as a relatively uncontroversial alignment of Ucits and AIFMD (the Alternative Investment Fund Managers Directive) in the areas of depositaries, sanctions and remuneration, the talks had turned into heated discussions on fund managers' remuneration and restrictions on performance fees.
In October 2013, it was reported that Asia was making rapid strides in its attempts to create its own version of the Ucits harmonised framewlrk for product regulation that would allow funds from one state to be distributed in another. In January a mutual recognition platform was proposed for public funds between Hong Kong and mainland China. In September, the finance ministers of Australia, New Zealand, Singapore and South Korea signed a statement of intent to develop a passport for cross-border fund sales and in October the regulatory bodies of Singapore, Malaysia and Thailand announced they would try to create the same thing.
Total net assets in Ucits vehicles stood at €6.5tn at the end of June 2013, according to data from the European Fund and Asset Management Association.