FAQs
UCITS or 'undertakings for the collective investment in transferable securities' are investment funds regulated at European Union level. They account for around 75% of all collective investments by small investors in Europe.
What is a UCITS in simple terms? ›
UCITS (Undertakings for Collective Investment in Transferable Securities). Defined as organizations, whose sole purpose is to collectively invest - in securities and other financial assets - capital raised by the public and which operate under the principle of risk management.
What is the difference between UCITS and sicav? ›
SICAV vs.
SICAFs are similar to closed-end funds in the U.S. SICAFs are an acronym for Société d'Investissem*nt à Capital Fixe. They are traded on public market exchanges and operate with a fixed number of shares. UCITS structured SICAVs are actively cross-border marketed in Europe.
What is the difference between a mutual fund and a UCITS fund? ›
UCITS funds are a type of mutual fund that complies with European Union regulations and holds securities from throughout the region.
What is the difference between a UCITS ETF and an ETF that is not UCITS classified? ›
ETFs which are UCITS compliant must follow minimum standards - that includes holding a diversified portfolio, publishing clear guidance on their charges and taking steps to safeguard investors' money. Some ETPs are not eligible for UCITS standards - including ETCs, ETNs and US-listed products.
What is the difference between ETF and UCITS? ›
For ETFs using derivatives, exposure should be covered with collateral valued at 90% of NAV and meet minimum risk management standards. UCITS funds cannot use leverage other than on a temporary basis and up to a maximum of 10% of their NAV.
What is the purpose of UCITS? ›
UCITS stands for Undertakings for the Collective Investment in Transferable Securities. It is a regulatory framework that allows for the sale of cross-boundary mutual funds for EU member states. UCITS were created so that retail investors have transparent, regulated, and cross-border investment opportunities.
Can a SICAV be a UCITS? ›
UCITS can be established as investment companies with variable capital (SICAVs), investment companies with fixed capital (SICAFs) or as common contractual funds (CCFs) in Luxembourg or as investment companies, unit trusts, common contractual funds (CCFs or Irish Collective Asset-management Vehicles (ICAVs) in Ireland.
What qualifies as UCITS fund? ›
The term “undertaking for collective investment in transferable securities” (UCITS) should not require much explanation, it speaks for itself: It is an undertaking for collective investment (or “investment fund”) which invests in securities, i.e. in stocks, bonds, stocks and bonds, short term treasury instruments and ...
What are the disadvantages of UCITS funds? ›
Disadvantages:
- Costs: UCITS funds can have higher costs due to compliance and regulatory reporting requirements.
- Investment restrictions: Strict investment rules might limit the fund's ability to take advantage of certain market opportunities.
Vanguard S&P 500 UCITS ETF (VUSA)
The Fund employs a “passive management” – or indexing – investment approach, through physical acquisition of securities, designed to track the performance of the Index, a free float adjusted market capitalisation weighted index.
Can Americans invest in UCITS? ›
You can purchase UCITS funds through a U.S.-based fund manager. That said, only an authorized EU-based management company can oversee that fund. So a U.S. fund manager either must set up such a company or partner with one. It's not a roadblock, but it is an extra step.
Is UCITS an ETF? ›
Tracked indices must be sufficiently diversified UCITS ETFs are identified by the “UCITS ETF” label in the fund name. This enables investors to quickly identify funds that are subject to the UCITS regulatory framework.
What is the 10 rule for UCITS? ›
This has been enshrined in what is commonly known as the 5/10/40 rule which is that a UCITS may invest no more than 10% of its net assets in transferable securities or money market instruments issued by the same body, provided that the total value of transferable securities or money market instruments held in issuing ...
Are UCITS subject to US estate tax? ›
UCITS are a type of non-U.S. investment registered on a foreign exchange. UCITS aren't considered U.S. assets and therefore aren't subject to U.S. estate tax.
Can hedge funds be UCITS? ›
UCITS hedge funds, or alternative UCITS funds, are mainly targeted for Euro- pean hedge-fund investors. Traditionally, for non-U.S. investors, hedge funds' legal domi- cile is where regulatory requirements are at a minimum, often in offshore tax havens.
What does UCITS mean in investing? ›
UCITS or 'undertakings for the collective investment in transferable securities' are investment funds regulated at European Union level. They account for around 75% of all collective investments by small investors in Europe. The legislative instrument covering these funds is Directive 2014/91/EU.
How does a UCITS fund work? ›
An Undertaking for Collective Investment in Transferable Securities (UCITS) is an investment fund that invests in liquid assets and can be distributed publicly to retail investors across the EU.
What are the key features of UCITS? ›
UCITS Key Features
Asset Eligibility – At least 90% of assets must be in liquid (UCITS eligible) instruments. No direct short selling is permitted. Direct exposure to real estate and commodities is not permitted. Asset Diversification – No single asset can represent more than 10% of the fund's assets.
What is the advantage of UCITS? ›
Liquidity and flexibility: UCITS ETFs provide ease of trading with the added benefit of diversification. Transparency: Regular disclosure requirements ensure investors have a clear understanding of where their funds are invested.
