Undertakings for Collective Investment in Transferable Securities (UCITS) are an internationally recognised gold standard for regulated investment funds and are established and authorised pursuant to a harmonised European Union (EU) law framework. The sole permitted object of such schemes is the collective investment in transferable securities or in other liquid financial assets, of capital raised from the public, operating under the principle of risk-spreading. One of the key characteristics of UCITS is that shares/units thereof must be repurchased or redeemed, directly or indirectly, out of the scheme's assets at the request of unitholders i.e. they must be open-ended. UCITS are suitable for distribution to retail clients.
Ireland is currently the fastest growing UCITS domicile in Europe with asset levels in Irish UCITS having increased by 280% since the end of 2008. Almost 80% of Irish domiciled funds are UCITS. The assets under management in Irish funds have significantly outgrown its main European rivals (Luxembourg, the UK, France and Germany) over the last ten years. During 2015, UCITS net assets domiciled in Ireland increased by 13.4% to €1.45 trillion. Irish UCITS are distributed across 70 countries globally. As at August 2016, there were 3,968 Irish domiciled UCITS funds (including sub-funds) with UCITS net assets domiciled in Ireland in excess of €1.48 trillion.*
UCITS are widely used by retail and institutional fund promoters and are increasingly being structured to complement existing alternative managers' offshore/onshore flagship funds.
*Source: Irish Funds (IF) and Central Bank of Ireland, August 2016
Maples Leading UCITS Practice
In the context of continuing UCITS growth, it is notable that our Irish Funds Group has since 2010 consistently established more new Irish funds than any other law firm. We believe that the volume and depth of our experience and expertise across the UCITS spectrum is unrivalled.
We have been involved in a significant level of new product creation (and product innovation) in the UCITS space such as the first UCITS to be authorised under the new ICAV regime, the first UCITS management company passport approved by the Central Bank, the first Irish UCITS to be permitted to use the Hong Kong Stock Connect programme and the first Irish authorised UCITS with full access to the Chinese equity market via a Renminbi Qualified Foreign Institutional Investor (RQFII) licence. We have also advised on a number of cross-border mergers since the implementation of UCITS IV and advised in respect of the establishment of Irish master-feeder UCITS structures.
Maples' UCITS ETF Expertise
Maples has a wealth of experience in the area of establishment and on-going operation of ETFs acting for the majority of the investment banks in relation to their Irish ETF platforms and currently advising (inclusive of sub-funds) approximately 150 ETFs, alternative funds including real estate funds, infrastructure funds, money market funds and private equity funds.
We have, through our innovative structuring advices, such as a recently approved ETF cross-border master/feeder, ensured that Maples is at the forefront of the Irish ETF market. We facilitated the acceptance by the Central Bank of the use of currency versions of financial indices which results in greater accuracy of hedging currency risk and a reduction in costs for shareholders. We also have extensive experience in regard to index approvals with the Central Bank and the use of financial indices in the UCITS space.
Further details on our ETF experience are available in the ETF section of the website.
UCITS across Jurisdictions and Businesses
Over the past 30 years, the UCITS product has become increasingly popular as a liquid, transparent, diversified and robustly regulated investment product which boasts the flexibility to accommodate a wide range of investment strategies.
UCITS are capable of being registered for sale to the public not only throughout the EEA but more than 70 countries worldwide accept UCITS as suitable for distribution into their domestic markets. However, in order to benefit from the UCITS passport, UCITS funds are subject to detailed investment restrictions, diversification and borrowing limits, and minimum capitalisation and substance requirements. Further details on our services supporting the global distribution of UCITS are available in the Global Registration Services section of the website.
Key Features of a UCITS
- UCITS are collective investment schemes established and authorised under a harmonised EU legal framework pursuant to the UCITS Directives;
- As harmonised fund products, once established and authorised in one EEA member state UCITS can be managed and sold cross-border via the UCITS passport to investors in other EEA member states without requirement for additional authorisation;
- The UCITS passport enables promoters to create a single EEA product rather than having to establish the same product on a jurisdiction by jurisdiction basis.
For more information about UCITS, contact our Dublin office on +353 1 619 2000.